Liveblog of Richard Stursberg presentation on programming cuts

Business Plan Update conference call starts 2009.03.26 14:02.

STURSBERG: Well, thank you for coming. I know many among you and many of the people on the phone had a pretty horrible morning. There isn’tanything nice about any of this, and I know how difficult it is for so many people here in terms of the people and the shows and the things that we’ve been doing. There isn’t any happy way to do this. There is only a difficult way to do it.

What I would like to try to do today is talk about why we made the decisions we made, and then also show you in more detail – I think everybody has been spoken to in terms of what’s being affected, their shows and whatnot – I’m going to try to show you what’s affected in terms of English network as a whole. The logic of why it’s being done this way.

This is the beginning of the conversation, and we’re going to try to make sure that we create lots opportunities for people to talk and understand what’s going on and why it we’ve approached it the way we’ve approached it.

I know we’ve talked about this a lot in the past, but I do want to remind people, because it’s the core of how these downsizings are going to be managed. Things actually are working very well for us, and I know I’ve said this a number of times, but we need to keep in mind that radio is doing well. Radio’s share is at an all-time high. Television is doing very well. Last time an all-Canadian prime-time schedule has beaten an all-American? Never. Grown by 2 share? Never.

CBC.CA continues to be the number-one Web site in the country, and its growth seems to be accelerating – in unique users, page views, members. So it’s very important because it means all the work we’ve been doing has actually been working. So let’s try to keep our strategy to the extent that we can, given these difficulties.

How many people actually view one or other of our services every week? 20 million Canadians – almost 80% of the English Canadian population. That’s an extraordinary response to what it is we’ve been doing.

So I know we’ve been talking about this yesterday, but I’ll just maybe mention it again today. What we would like to try to do is, to the maximum extent possible, stay on strategy so that when the economy recovers we’re in a position to take advantage of it, and we have not destroyed those things, or have damaged those things, as little as possible.

(Keep Radio One and 2 share, and grow audiences on TV.)

News renewal, underway for two years now, is fundamental to CBC’s brand and has to continue. People in the regions, especially the Maritimes and some parts of Ontario who found the resources available to them have been reduced. We want to try to stay as much as we can anchored in the regions, but it is challenging. And we must, I believe, continue to invest in new platforms, even as we come through this difficult time (so we’re in a better position) so as not make the future hostage to the present difficulty.

Have to manage these resources in the context of our financial situation. How does this business actually work? How does CBC work? These numbers are 2007–2008, the last full year we have numbers for. The green bar is revenue, and the red bar is cost, and I’m going to walk you through this because there’s a lot of misunderstanding of things.

Procured programming means foreign shows – Simpsons, Coronation Street, American movies, etc. They make money, and they contribute to everything we do.

Professional sports makes money.

So one of the implications of this is if you cut these things you dig yourself a bigger financial hole. That’s all that happens. A lot of the conversation that’s take place in terms of Jeopardy and Wheel of Fortune in the press is just silly. Either (A) give us more money so we can replace them with Canadian shows or (B) we do less Canadian shows. It isn’t more complicated than that.

TV news loses a lot of money. If that were CTV, it would make money, and there’s some reasons for it, but what it points to is the requirement to continue the news-renewal process. Recommitting to local television news because that’s what Canadians want and that’s where all the revenue is. (Last time we did that, it just dug a bigger hole.)

Drama and comedy: If this were any other place, they don’t make money. They can’t cover the costs. That’s why we have these subsidies. But there’s a problem. If you cut this, then the amount of money you can draw out of the CTF goes down. So you don’t draw the full envelope, so they take the money away and give it to somebody else (like last year with CTV). [Some joke I missed.]

Amateur sports: Bluntly, amateur sports has been carried by the margin in pro sports.

Documentaries: The same issue arises as with Kids. If you start cutting indie producers, you reduce your ability to draw from CTF. In this case, you’ll see that because our docs are half in-house, one of the good things that’s happened is changes in CTF rules mean we’ll able to access the CTF for in-house productions. So Mark’s red bar should come down, which will be good. But we have to continue to commit to it.

Kids and Radio: No revenues associated with either of them. In radio, 85% of costs are people, so that inevitably if you reduce the dollars available to radio, you reduce more people than you would if you were dealing with drama and comedy, because they are completely commissioned. We don’t do it with our own folks.

If we cut the procured programming or pro sports, we dig ourselves a bigger hole. The numbers you saw are before Wheel of Fortune and Jeopardy and the new NHL contract. There are no revenue opportunities (on radio), though radio remains central to everything we do in our transformation to a content company but shares in the infrastructure of everything.

Our commitment to local television news is very important – total market value is $162M, of which we take almost nothing. But as others withdraw, like E, A, Global, CTV channels, there is an opportunity, I think. And we can take significantly more revenue going forward (there).

Lifestyle/living shows have been dropped in part because we just couldn’t figure out a way – they were beautiful and were brought in on an extraordinary price point considering how beautiful and polished they were, but we just couldn’t figure out a way of getting them to break even.

The difficulty with a lot of regional production is inevitably it costs more than network. If you make regional shows, you probably make 10 to 12 or 25 on radio (versus one national). That’s just the reality of the regions, which makes it difficult to deal with these cost questions.

Having said all that, we did not approach these reductions as pro rata. We thought that was wrong and would lead us nowhere. We did not want it to be about perceptions of internal equity. Filter the cuts through the maintenance of strategy and economic realities of English services. I don’t want you to think we did this proportionally. We didn’t.

The regions are cut less than they are proportional to the total dollars that are currently invested in them, and radio less than television, though marginally less, I would say.

$85M reduction. 400 people touched by this. Let me rephrase that, there are almost 400 jobs that are touched by it. 400 jobs taken out of English services – approximately 10%. We hope very much the ultimate number of people to be laid off is very substantially less than that.

Voluntary retirement incentive plan. Anybody who has 85 points or who is 65 or older. If 10 jobs were supposed to go, if people want to take 10 retirements, we’ll wind up those 10 jobs and we’re done. But if 20 people do, we’ll say no; you can only take 10 from that area and we’ll do it by seniority. If we took the 20, we’d be no further ahead.

Released April 6, open for about a month. Then we’ll know how many jobs have gone away and how many are left that we’ll have to deal with.

Say 200 people take the (package). That leaves 200 left. Can we now use the vacancies intelligently and abolish a whole bunch of those? Get another 100 that way? So instead of 400 layoffs, you get about 100. I should just say we have spent a lot of time with the union working on this. On Friday had a meeting with all the unions. Elizabeth and I met with CMG and everybody yesterday. Are trying to figure out the best way to minimize the number of layoffs. Relationship is very good. We’re trying really hard to make sure that we can do this together to minimize people actually laid off.

You will see that some of this is pretty devastating. Radio network shows in Toronto: Cancelled some shows. Inside Track, Out Front. Reduced music recordings by about 50%. Reduce drama, but will do some. Try to make some more synergies with Radios 2 and 3, since they’re both music offerings without getting rid of Radio 3 or cut back Radio 2.

Had already pulled back significantly on travel, discretionary. That will continue.

Many network shows into regions. The Point is gone this afternoon, or I mean The Point will be gone. Live music production capacity reduced. [Gregory Charles show, too? Missed that.] Try to be rational on satellite streams.

Means there will be holes in the schedule. Trying to think of smart way to (repeat our smart programming) so that the quality and density and richness of Radio One will remain.

We have not closed any stations. We have wound up two one-person bureaux – Thomson, Manitoba, and La Ronge, Saskatchewan. These other places have been reduced. The way we try to approach it in this case was a little bit about equity. Cost of providing local radio service per person served; we said we should reduce costs to those places that have the highest cost per person served. Because of the history of the CBC, where it grew more from the east to the west, we find the cost there is higher in the east than in central Canada and the west.

Noon show will continue – reduced from two hours to one. Resources to be reduced and standardized. $500,000 reduction for CBC North.

$5M from network level and 20 jobs, but that will not be 20 layoffs. $9M from network shows in regions. $5M in local regional shows in radio.

Television: Last week we already announced Steven and Chris were gone for next year. When we approached television, the thing we want most to do is to maintain the prime-time schedule, which is where revenue sits and CTF goes. So the first place to trim is non-prime-time. Kids in the morning has no revenue, but we have to be careful with it because it draws CTF dollars. Afternoons: Steven and Chris, Fashion File, the living shows have had to go.

Nice one-offs like Destination we can’t do for the time being. A lot of the big shows, we are going to have to reduce the costs for them. Fred has been busy saying to producers you’ll have less money in licence fees and episodes. The Border, 22 Minutes, Mosque have fewer episodes. $28M there, 110 jobs.

Some digital extension for TV shows: Some of that money has to come out. Not to be confused with something that will come up later. Not sure how to handle this, because when they change the rules for Canada Media Fund, must make shows for two platforms at a time. Careful here or we don’tdraw the fund fully, and that would be a mistake.

Sports: No more Blue Jays, plus a whole bunch of these amateur sports things are gone, though we might do some international figure skating if it’s in Canada. Which is a shame, because we’re big champions of amateur sport. That seems like few jobs compared to the amount of money – a lot of this money is tied up in rights costs, and there are not a lot of full-time jobs. You need a commentator for soccer, but not a full-time commentator.

This is perhaps the most complicated piece. News renewal started 2½ years ago. Let’s grow supper hours back to an hour when we got rid of Canada Now. Have almost doubled their share compared to nadir of Canada Now. Vancouver as testing ground for full integration. Took all of news assets about a year ago and put them all into the news department and took the next big step to reorganize it to provide full integration and meet the requirements of Canadians. We did a lot of research on that: Yes, people wanted context, but also wanted 24/7 news on whatever platform was convenient.

Jennifer and Todd and Seaton and Gino have been heavily involved in working through how this actually works. About 200 people in the news department have been involved in the consultations, with a development process on new shows. Boom, we got blown off course because of the downturn.

Now, unfortunately, news must contribute like everybody else: $7M, about 80 jobs. The difficulty here is executing the news-renewal task while layering in this $7M cut. We literally did not conclude with the Board on final details (on this question of fitting those two pieces together). Will come back April 16 to lay it out for the news department.

Small-market radio news is understood; is part of the cuts mentioned before. Fifth Estate and Marketplace budgets reduced. It’s the other $4M and 50+ people that we don’t understand fully yet.

Important to continue to invest in news platforms. The only areas not seeing reductions, where we’re putting in new money. .CA will have greater functionality, grow it out, because it supports everything – all of the extensions, whether local, sports, whatever. Growth in revenue is all here. Not to say there’s a huge amount of money here yet.

Why cut and also invest? Not to allow the current situation to cut us off, as it were, growth for the future.

Significant reductions in sales/support. Media sales and marketing 22 jobs, communications 12 jobs, a couple of jobs in content management and finance and admin. Production centres, libraries, archives: Still working our way through this, since some of it is caught up in news renewal.

Voluntary retirement: Aren’t we going to get ourselves in a jam with these cuts in terms of increase in the diversity of our workforce? But that’s skewed by age: Younger workers are more diverse. (Taking buyouts) would take pressure off our younger workers, who are more likely to be laid off because of the rules of our contracts.

(Small recap.) What now is left after all these cuts?

Radio and local in all major markets: Morning and afternoon drive shows are intact. Radio One and 2: Denise and Chris are figuring out how to retain the integrity of the schedule by using (unclear). No ads on Radio One or 2. Production efficiencies.

Television: The only reason we do it is to make Canadian shows. To hold to the Canadian content we do. 80% in prime time will remain Canadian. We’re going to increase the overall CanCon by about half an hour – get rid of Martha Stewart and Simpsons and replace with another American show, leaving a half-hour (to add). Will let us maximize revenue, CTF.

News renewal continues. If we execute it, will steal market share from all our competitors and end up with a news offering stronger than anybody else and much more valuable. Principal news sources for people are newspapers, conventional TV, CBC Radio. Those are the great news sources and they’re all under enormous stress. They want to walk away from news. So CBC becomes even more important in that environment.

Regions: No stations closed; two one-man bureaux closed.

.CA: Incremental dollars.

Current TV Canada: Money’s still there for that.

We used to have the online sales outsourced to AOL; brought it in-house.

Just to conclude, this is a really horrid situation. And the size of the cuts is very extensive: about 10% of the jobs, about 12% of total budget. This cut is bigger than the cuts Global took in people – 7.8% of workforce there. Cannot underestimate the severity of what is happening. This is going to be a very difficult process for the next number of months and maybe beyond that.

It’s also going to have knock-on effects to a lot of people (live music, independent producers, actors, musicians, directors). We are, as it turns out, the absolutely overwhelmingly most important commissioner of every kind of cultural product in the country – whether it’s songs, whether it’s shows, whatever it may be. So when we get hurt, it has a more devastating effect than when anybody else gets hurt.

We’ve tried to do this is in a way that is as intelligent as sensitive as we could. Nobody’s happy with the outcome because there is no happy outcome. The least bad way possible, if I can put it like that.


  1. Q. from Al at the National, at CBC for 15 years: Tensions that exist between you and us in news/current affairs/documentaries. Whether it’s good or bad, it exists. You mentioned share. Those numbers would be different if you looked at 2008–09. Issues other than share, like impact, why Canadians watch CBC. I want to focus in on the Fifth Estate. I don’t work there, but it’s a program that illustrates the tension for the last few years. It’s been beaten and bruised for a number of years. Budget come down, fewer shows, moved from Wednesday to Friday. If you are fan of it, you aren’t going to like what’s going on.

    — So what’s the question?

    — Let me just finish. We don’t get many opportunities. $1.7M for the Fifth Estate and Marketplace: The Fifth Estate is a program that contributes to the Canadian discourse in a way (out of proportion to its share). Lottery coverage, Schreiber/Mulroney. They get talked about by other media.

    — I’m going to cut you off, because there’s a lot of people.

    — I want to get to the retirement thing. You could have every host of the Fifth Estate retire because of the 85/55 formula, senior people retiring, and the program having a lot less money. It’s symptomatic of the whole thing. Problem in terms of the value that’s being put on things outside of ratings and share. (Applause.)

    A. Let’s talk about that. Is anybody happy with this? No. I’m a little bit surprised, frankly, at the premise of the question, because over the course of the last number of years, the news department has been essentially been held harmless. And we’ve said to increase the amount of news that we’ve done. We’re prepared to put resources in to do better news. The size of the cuts associated with the news department is smaller compared to what’s going on in lots of other places, so I reject the premise heartily.

    We want to maintain our investigative capacity. We’ll see on the 16th, where we go through the entire structure of the news. Central component is investigative stuff.

  2. Q. from Steve, TV technical: VRIP. How exactly will the process work? Will the department recommend individuals that the VP will consider?

    A. The department will have this number of jobs. Everybody who would like to take the retirement incentive can (to the maximum). Entirely voluntary.

  3. Q. from woman: Are they losing any positions? [First part unheard.]

    A. Management in the CBC is about 8.9% of total complement, senior management 0.5%. Cuts will fall pro rata on everybody, so you can expect 8.9% of cuts to fall there.

  4. Q. from Alison Dempster, Sudbury: I feel I was duped yesterday when you said you were making regional stations a priority. 17–21 cuts, potentially 8 in Sudbury, none for Toronto, Ottawa programming. I feel you’ve just cut us loose. I have a hard time seeing any so-called internal equity, as you put it.

    A. Nobody wanted to cut Sudbury, Sydney, anybody, but we had to cut something. Highest cost per Canadian served. [Remainder of answer missed.] Is it going to make anybody happy? I don’t think so.

  5. Q. from man: Internet to be increased and digital. Does this mean we’re going to see ads on the CBC Web site?

    A. You already do. Been there forever, really. Obviously you’re not going to the CBC Web site enough. Yeah, absolutely. We’ve been selling it aggressively. Two years ago the rules were more restrictive on Web than on TV, which we changed.

  6. Q. from woman (Gillian Findlay?): I’d like to set the record straight, because you’ve said a couple of times there have been no cuts to current affairs. Our program has an operating cut every year of the last three years. Marketplace is now a half-hour program. My question, if you’ll just let me finish, is we get a subsidy (and the purpose is in part to) subsidize this programming that the privates do not do. You said we were going to grow investigative reporting. By your own won numbers you’re going to lose a number of people who do investigative reporting, so how are you going to grow it?

    A. CTV does do current affairs; they do W5. We get a subsidy for that and for radio, drama, comedy, kids’ shows, for all sorts of different things. Nobody wants to do this, and I’m not sure exactly how to respond when people say “We’re of more value than anybody else.” More valuable than radio, than kids’ programming? I don’t know how to deal with that. Nobody wants to do this, but this is where we find ourselves. So the question is, I think how do we do it in a way that will be the least painful for the overall organization? This is the best we can do with the problem.

    (Inaudible interjection.)

    Are they of greater value than Little Mosque on the Prairie? I’d say no. I’d say they were of equal value. Let me put it to you this way, just for fun – (hooting). Hold my jacket now; we’re going to take this outside.

    I think it is invidious and unfair to start this kind of conversation. I don’t think it helps collectively and doesn’t help each other. It isn’t right to say I’m more important than you are. It will pull us apart at exactly the time we need to be pulling together. (Applause.)

  7. Q. from man: I’d like to clear up the confusion about Fifth Estate. But we did take a cut last year in the middle of the season, is that not the truth?

    A. Yes, and you made more shows.

    — So how is that holding news harmless?

    — The premise of the question was untrue. Overall budget for news and current affairs has remained constant. I don’t know where this comes from and I think it’s unfair and I think it’s wrong. That’s what I’m saying.

    — It is the case that every survey shows that what Canadians want is news and current affairs above all else. And yet, you’re asking in the case of the Fifth Estate, at the risk of being parochial, that we should take a 20% hit. So you’re taking a core element of your business –

    — I don’t know how to respond to this. Radio is a core element. So is kids.

    — How can you justify the Fifth Estate taking a 20% cut?

    — We said we would not make pro rata cuts.

    — I understand that, but I’m asking why you can justify this particular cut. (Agrees with no pro-rata cuts.) I’m asking you for the calculus.

    — There was no mathematical formula behind this, if that’s what you want. In the context of things, this is not an unreasonable thing to do. That was the beginning and the end of it. Should it have been 1.1? 900,000? 1.3? There’s no science in this. This was the best we know how to do at this point in time.

    (Interrupts the questioner.)

  8. (Inaudible question.)

    A. No. (Groaning in room.) No. Come on. How is that fair, you know? Essentially, you’re saying – I don’t want to get into it. The press is on the phone. Essentially you’re saying we matter more than anybody else. (Shouting in the room.) I’m sorry if you don’t like the answer, but it’s the best answer I’ve got.

    Jennifer: At the end of the day, nobody wants to cut, but we’ll make sure that we uphold the quality of what we do. Look at new ways of doing what we’re doing. The assumption that we can’t do it, which is where we’re starting from here, is a false assumption.

  9. Q. from Kathy in Thunder Bay on phone: I will take one minute, because it is rare we get to express our opinions. I’ve worked in about six to eight CBC locations, network, regional, and local, and if you believe that a per-capita cost is an equitable way to cut, then I’m not sure you really understand how important CBC is in small centres. All of those people become the parents of the grandparents of people who move to (big cities) and continue to watch and listen to CBC. When the economy recovers, will management promise/guarantee/undertake to restore jobs, particularly in small locations?

    A. No.

    — Thank you!

    — In fairness to all Canadian citizens, we’d open another radio (station). Would we do that in favour of restoring (what we had)? Why do some people get better service than others? I don’t understand that.

  10. Q. from woman from Marketplace: I look at quarterly reports of corporations outside the CBC, but I don’t think I’d be impressed with our ad revenue and how we were spending our money. I feel like the downturn is hiding problems with management and ad sales. Where were things before the downturn?

    A. It’s not complicated. We have a very big problem in terms of television: Most other entities have very significant specialty holdings; we have one of any consequence, News world. We have a huge structural problem. Ad revenue of specialties has been going up despite the fact they also get cable fees; ad revenues of conventionals have been going down despite the fact they produce overwhelmingly the most Canadian programming. Then we had the economic collapse. If we were the only one collapsing, I would be very concerned as to whether our marketing and sales group was any good.

    Sorry, can I just finish? The Summer Olympics? We did great there too; that was before the downturn.

    The target actually was set, if I’m not mistaken, 10 years ago, so it was a little artificial. Global has essentially written off its conventional TV networks. Put ’em up for sale; there are no buyers. I read the prospectus; there’s nothing there to buy. They used to trade at $20; they’re trading at 5¢. CTV the same; $100M loss on their conventional business. It’s happening to everybody. How’s that?

    (Inaudible retort.)

    — The situation that they have, NBC, ABC, CBS, it’s the same for all the conventional broadcasters in North America; there is no difference.

  11. Q. from John, Digital Archives: Out of crisis can come ingenuity, and I think we’re about to cross the Rubicon. I kind of felt for you and the management team in yesterday’s broadcast. I understand and appreciate the trouble you went through. But we need your help, and we’re in this together, and this is a time for solidarity as much as it is for divisiveness and anger. (Applause.) The question becomes: What are we all prepared to do? I’m going to give up one day a month of unpaid leave for a year if we can work it out. Many I’ve talked to are willing to do the same. Save jobs, save money, maintain the quality of show we’re accustomed to such as Marketplace and Fifth Estate. Take this information to the prime minister, the minister of finance, and the minister of heritage.

  12. Q. from Michael Hughes, lawyer: As I understand it, this profoundly depressing situation stems in large part from the callous turndown of the Harper government and the heritage minister of our request for bridge financing. “I can’t play favourites for CBC when the privates are going it alone.” CTV and Global are now running to the CRTC and asking for help (in a handout from the CRTC to the extent it can give one). I read the notes for the president’s quite stellar speech today in Montreal, but I hope we are doing whatever we can to get back to the PMO and Cabinet and say the model you used to turn us down with has a fallacy now because privates are asking essentially for a bailout. Otherwise you’re going to be perceived as frankly stabbing the CBC with a major cut. Are we doing that?

    A. The president told the Empire Club he wanted a meeting with the prime minister; has never been offered such a meeting. He made exactly that point (in today’s speech): “I do find it difficult there are rumours to the effect they are considering bailing out Global and CTV but won’t lift a finger to help us. We still don’t have the $60M or capital budget signed up five days before end of fiscal year. Not a problem of money, but one of governance and good management.” Have to get to a point, president says, where we are tread more respectfully. (Applause.)

  13. Q. from Yellowknife: Asset sales. Won’t we be missing the $125M in fiscal 2010 because we won’t have those assts to sell again?

    A. Essentially correct.

[Scribe ended at 2009.03.26 15:22.]

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Updated 2009.03.27 12:17