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It's All Over for Hockey Night in Canada. Can the CBC Survive?

07/08/2013 04:52 EDT | Updated 09/07/2013 05:12 EDT
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This year is the 60th anniversary of the birth of CBC's Hockey Night in Canada, a fact advertised more or less constantly on the public broadcaster's radio and television networks.

Last year was the 80th anniversary of the CBC itself (in the nascent form of the Canadian Radio Broadcasting Commission, or CRBC), launched, against all odds, in the heart of the Depression by a Conservative government under R. B. Bennett. It was also the 80th anniversary of the invention of Leggo, of Glenn Gould's birth, and of Hitler's election to power in Germany. The public broadcaster took notice of only the last three.

That the CBC should celebrate Hockey Night in Canada's birthday, and not its own, is emblematic of the dire straits in which the broadcaster finds itself, having reached the end of the line in its quest to make a success of the hybrid, commercial/public service model it was saddled with at birth, like a club foot.

Hockey has been at the heart of the corporation's revenue strategy from its earliest radio outings as a marketing vehicle for an American oil company. Now it appears likely to lose that money spinner to one or more of the wealthy private networks when rights are renegotioated next year. And as the CBC staggers under serial cutbacks to its federal subsidy, the loss of hockey revenue could well be a knockout blow. The fate of the corporation and of Hockey Night in Canada seem bound together in a kind of Gordian knot.

More than 3 million Canadians tuned in to Hockey Night in Canada right after the end of the lockout this year, and the numbers peak at 5 million or more for the better playoff match-ups. It's become a truism that the game helps to glue the nation together by providing shared moments of highly-charged emotion, experienced collectively via television.

Most of the world's public broadcasters carry pro sports for just that reason. It helps them to draw as many citizens as possible into the public space broadcasting creates, a space in which, ideally, diverse audiences can experience the best television has to offer in all genres of programming from sport to news and documentaries to comedy and drama. The BBC, for example, spends roughly the same percentage of its income on sports licensing as the CBC does.

For the CBC, hockey serves an additional, unfortunate, role -- that of a cash cow. It provides about a third of the annual haul of ad revenue -- about $100 million.

The BBC, still the world's paradigm for what a public broadcaster can and should be, is financed largely through a compulsory annual license fee. Its programming is commercial-free. Its coverage of pro-soccer (and its sports journalism in general) is, as a result, infinitely more complete and critical than the CBC's coverage of the NHL -- the hand that feeds it.

So while CBC managers revel in the cash that pours in when ratings for current playoff games top 5 million and regular season games hit 3 million, for those of us who believe that CBC cannot be both a commercial and a public service network at the same, that's not a cause for rejoicing -- it's an existential headache. As long as CBC remains dependent on commercial sponsorship, it will never be able to do its job properly.

But, what if we were to rethink the situation as not just a crisis and a mess, but an opportunity? It's just possible that the difficult circumstances facing the CBC today in are in fact exactly what's needed to complete the job Bennett began back in 1932, and create a true public broadcaster comparable to the best the world has to offer.

A closer look at hockey on the CBC reveals the following: it costs the corporation about $100 million for current broadcast rights, which it shells out to the $3 billion mega-corporation called the NHL, and about $45 million in production and sales costs. (These numbers have been sifted from CRTC filings by Canadian Media Research Inc.'s Barry Kiefl, who was for decades head of research at CBC.) Let's see...that's $145 million in expenses to generate $100 million in revenue. So dropping hockey would put the CBC about $45 million ahead of the game.

If hockey were to be taken over by some combination of the country's highly competent commercial broadcasters, as it almost certainly will be, the fans would lose nothing and the public broadcaster would save some money.

The CBC, though, would lose its access to the broadly-based national audience that hockey (and other sports events such as the Olympics) provides. But that's just the beginning of its problems.

The real challenge facing the CBC, if and when it loses NHL hockey, will be filling the 350-400 hour hole that would open up in the television broadcast schedule. From October to May, fully 40 percent of the network's prime time schedule is Hockey Night in Canada. (Forty percent!)

To produce that much alternative Canadian content (in a mix of genres) would cost, ballpark, $200 million. But more than half of that expense would be covered by avoiding hockey rights and production expenses.

So the CBC would have to come up with something in the neighbourhood of $55 or $60 million to produce all that new programming. Some substantial portion of that cost could be covered by advertising revenue; exactly how much is anyone's guess, but the revenue shortfall would certainly be in the tens of millions.

The corporation is already on the ropes, bled white by successive cuts to its federal appropriation and fragmented audiences. Its current strategy is to pour more and more of its limited resources into the ratings lottery on television, in a desperate hope to hit the jackpot with something, anything, that will drive audience numbers and thus and revenue. Thus we get, what Globe television critic John Doyle has called "a blinding sheen of lightweight nonsense." This can't continue if the CBC is to survive.

But there's an alternative strategy that could work.

What if the Corporation were to admit defeat in its current advertising-centred strategy and instead revert to its real mission of public service broadcasting? What if it were to relinquish all of its advertising on television to the private sector broadcasters like Bell and Rogers? And at the same time, renounce any and all plans to re-introduce advertising to radio.

To do that would necessitate boosting the corporation's current $1.1 billion subsidy by enough to replace total annual advertising revenue ($300 million), plus the extra needed to cover those hockey-replacement program costs (c. $60 million).

But that would merely put the corporation back on the same starvation diet that's stifling creativity and experimentation right now. So let's bump that $360 million up to, say, $500 million.

If a 50% increase in the CBC appropriation seems extravagant, consider this: Canadians currently spend about $34 per capita per year on their public broadcaster; Norwegians spend $164, The Swiss spend $155; Germans $147; the Danes $142, the Finns $116, The U.K. $111... and so on down to New Zealand at $27 and the U.S. at $4. Tripling our per capita expenditure would put us just above the OECD average and roughly in line with Sweden and Austria, but still behind the U.K. and Sweden. Raising it by 50 percent (to about $45 per capita) would match us up with Australia and Italy, still down near the bottom of the heap.

Where would the money come from? A 0.1% increase in the GST (it could be called an "arts and culture endowment") would do the job. But let's assume the pundits are right when they say that any tax increase for any reason is political poison.

Various independent analyses of the Canadian media industry, including one by the CRTC, detail the federal government's hefty annual subsidies to the country's private broadcasters. The exact number is difficult to calculate given the intangible value of such perks as restrictions on foreign ownership and tax policies that limit cross-border advertising, but the best estimates put the number at or close to $1 billion -- the equivalent of the CBC's Parliamentary appropriation.

That enormous private-sector subsidy, difficulty to rationalize in the current context of highly-profitable corporate media monopolies, would be impossible to justify if hockey were to taken over entirely by one or more of the private networks, and if the CBC were no longer competing for advertisers.

In other words, the strategy would be to reduce or eliminate the current, ineffective, public service requirements of private broadcasters (i.e. Canadian production quotas), and with that, the subsidies they're given as a quid pro quo for performing those services. The market can be relied upon to ensure that they continue to produce Canadian content.

The money saved in the diminished or deleted subsidies should be redirected to the CBC, along with some portion of the cash bonanza that would flow to the private industry when CBC relinquishes advertising. These new revenue sources would be more than ample to finance the CBC at a level that would allow it to become, in radio, television, and online, a true public broadcaster worthy of a great nation.

It has proved over the years that it has access to the creativity and the talent to produce extraordinary programming when given the chance. All it needs is money, and a management team that understands what public broadcasting is all about. Audiences will come, just as they do for the majority of the world's public broadcasters, most of whom top their national ratings charts.