Understanding and incorporating basic and complete facts about the broadcasting environment is critical in strategic planning. The CRTC has an important role to play in helping the CBC understand this environment. If such serious factual errors and misunderstandings, which have shaped CBC's current strategy, are not challenged by the CRTC, the errors, repeated often enough, will become conventional wisdom and Canadians will be left with a CBC that will not serve their needs.
Saturday, 8 December 2012
Friday, 7 December 2012
Thursday, 6 December 2012
Thursday, 29 November 2012
Monday, 26 November 2012
The table below summarizes Canadian sports program expenditures of CBC, CTV and the sports specialty channels in the years 2008 to 2011:
CBC in 2008, a year it held Olympic rights, spent $180 million on sports programming. This declined to $139 million the following year, the first year of the CBC’s current NHL contract, and increased to about $150 million by 2011. CTV, as expected, spends very little on sports; it spent virtually nothing in the 2011 broadcast year. Only in 2010, the year CTV and Rogers shared rights for the Vancouver Olympics, did CTV spend heavily on sports. That year CTV identified spending $137 million dollars on sports programming, meaning it paid dearly for the
The three sports specialty channels, despite having to fill 24 hours a day with sports, each spend less on Canadian sports programming than the CBC. In 2008 and 2009 TSN and Sportsnet had total program expenditures of between $92 million and $122 million. In 2010 expenditures of TSN/Sportsnet, who also aired the Vancouver Olympics, increased noticeably and in 2011 both were at $140 million. RDS spends roughly half what its English counterparts spend, some $66 million in 2011. So in terms of expenditures on Canadian sports, CBC leads all networks, including the three all sports channels.
The table below shows the total ad revenues of CBC TV, CTV and the sports networks in the past four years:
In 2008, with the help of the Beijing Olympics, CBC had ad revenues of $253 million. Revenues declined precipitously in 2009, as did the revenues of most companies during the 2008-09 financial crisis; they rebounded in 2010. Last year total ad revenues of CBC were $246 million. Sports probably accounts for something like $150 million in ad revenues on CBC TV, or presumably at least as much as CBC spends on sports. CTV, one of CBC TV’s main competitors, generates much higher ad revenues, $784 million in 2011. (Global TV, the other main competitor in the marketplace generated just under $500 million in ad revenue last year or about double that of CBC TV.) But neither CTV nor Global normally derive much revenue from sports.
Interestingly, even with the hundreds of NHL games carried on TSN/Sportsnet/RDS and the thousands of hours of other professional sports, the total ad revenues of the sports specialty channels are relatively modest, accounting for between $63 million and $129 million in 2011. So in terms of advertising revenue derived from sports CBC TV generates more ad revenue than its main competitors and the all sports channels. Of course, the sports channels make additional money from subscription revenues, which come in even when the NHL locks out its players.
Monday, 19 November 2012
Thursday, 15 November 2012
Saturday, 15 September 2012
Here we examine some of the facts about the NHL on CBC TV and other networks and consider what the real cost of HNIC is to the CBC.
While CBC airs 100 or more NHL games each year, including exclusive rights to the Stanley Cup finals, sports specialty networks air a surprising number of NHL games. This was a result of recent CBC NHL contracts, especially the contract that started in 2008-09, which resulted in CBC losing more of its exclusive rights to hockey. We examined the years 2010-11 and 2011-12 to determine what other NHL hockey is available to Canadian viewers:
There was a time when CBC TV had a distinct advantage over TSN and Sportsnet, which are only available on cable and satellite. When CBC abandoned over-the-air broadcasting on July 31st, it lost that advantage. In many communities the only way to receive CBC is via cable or satellite. In effect, sports specialty channels are now almost as widely available as CBC and they too capture large NHL audiences, although some of their games involve
|Former CBC executive with NHL's Gary Bettman|
Other Canadian networks have generally followed suit, perhaps fearing ridicule from their competitors over what they paid for rights. Having a publicly-funded network bid for sports rights has engendered a desire for secrecy. When U.S. networks sign deals with the NFL, NBA, MLB or the NHL, they are quite open about the amounts paid for rights. For example, the 10-year deal signed last year between the NHL and NBC Universal has a price tag of $200 million annually, a substantial increase from the previous contract. A number of analysts put the price of CBC’s current NHL contract at $100 million per season and the total cost of NHL contracts in
What does CBC spend on sports in general? CBC in 2008, the last year it held Olympic rights, spent $180 million on sports programming. This declined to $139 million the following year, the first year of the current NHL deal, and increased to about $150 million by 2011. The cost of the NHL contract is a large part of this $150 million. Also included in the $150 million would be the minimal amount spent on the other sports aired by CBC and the cost of HNIC production, especially all the salaries associated with HNIC, including the salaries of Don Cherry and Ron MacLean. HNIC costs more than just the rights money sent to Gary Bettman in
What ad revenues do HNIC generate? For years CBC has claimed that HNIC is a revenue generator, not only pays for itself but makes a profit and pays for other programming and is the jewel in CBC’s crown. Given the management structure of CBC, it is unlikely that anyone, including the president of CBC, knows precisely how much revenue HNIC generates (and almost certainly not the total cost of HNIC). In 2008, with the help of the Beijing Olympics, CBC had ad revenues of $253 million. Revenues declined precipitously in 2009, as did the revenues of most companies during the 2008-09 financial crisis; they rebounded in 2010. Last year total ad revenues of CBC were $246 million. Does HNIC account for half of the total ad revenues of CBC TV? Probably more like a third of the total revenues, with the hundreds of other programs on CBC accounting for the other two-thirds.
Let’s say that HNIC accounted for 40% of 2011 total revenues, or roughly $100 million. We have seen that the cost of the NHL rights and production of the NHL games is in the range of $125 million. So, even with the generous assumption that 40% of all revenues are generated by 350 hours of hockey and the other 8,000 hours or so of the CBC schedule only generate the other $146 million, HNIC must be losing money today.
The true cost of HNIC can’t be measured without considering the cost of selling the ads in hockey and other CBC programs. CBC’s sales and promotion expenses have increased markedly since 2008, from under $50 million to over $80 million in 2011. Some of the $80 million that CBC spends on sales, which, according to their sales department’s web site, has almost 100 managers, is spent on HNIC, perhaps $20-30 million. This amount should be added to the real cost of HNIC to CBC. Adding in the cost of sales means CBC’s HNIC is losing tens of millions of dollars with the current NHL contract, perhaps as much as $50 million.
These expenditure and revenue data raise an interesting question. If HNIC is currently losing money on CBC is the current NHL contract affordable for CBC or any broadcaster? The contract CBC negotiated with the NHL in 2008 gave CBC 100 or so regular season and playoff games and gave hundreds of games to TSN/Sportsnet/RDS at a combined rights cost of roughly half what the CBC pays. CBC paid a very high a price and unleashed market forces that make the current NHL contract unworkable. CBC may have priced everyone, including itself out of the future market for NHL games. If CBC can’t make a profit on HNIC, how could CTV,
CBC did without hockey when the players were locked-out in 2004-05 and fared surprisingly well, losing only a small proportion of its audience that year, according to the CBC. Of course, it wasn't competing against hockey and results would be more modest if it were. As it approaches 2014 the CBC would be wise to think about programming strategies that do not include NHL hockey, as Radio
The good news is that by ending HNIC and assuming replacement programs can eventually generate the same revenue it will free up something like $150 million (rights costs, production costs and sales and promotion expenses). That $150 million could be spent on new Canadian drama and other entertainment. CBC executives will argue of course that replacement programs for the 350 hours of hockey will cost hundreds of millions of dollars and bring in much less ad revenue. They might even suggest that all this expensive programming has to go into the HNIC time slot. What they fail to recognize is that the replacement hours don't all have to be original drama that cost $500,000 an hour and new programs can be strategically placed in the schedule. Even if it is only $75 million in savings that would actually double the budget that CBC currently spends on Canadian drama and comedy and perhaps lead to a CBC television service that appeals to a broader spectrum of viewers.
Note: all financial data provided by CRTC.
Tuesday, 11 September 2012
Last year the first quarter's report for 2011-12 included the annual audience targets for radio/TV and the annual results from the previous year; results were then reported in subsequent quarters. Here is what the report looked like last year:
Wednesday, 5 September 2012
Most of the international analysis had appeared in another Nordicity study commissioned by CBC, the purpose of which was to demonstrate that Canada spends less per capita on public broadcasting than many other countries. One study eagerly compares international broadcasters, while the other seems to say that models from other countries don't apply to Canada. Besides seemingly contradicting each other, neither of the studies addressed the audience performance of CBC compared to other countries.
Nordicity did in fact compare the audience performance of Canada (CBC) to other countries, the results of which are contained in a third study that can be found on the Nordicity web site. The latter was prepared for a U.K. audience and contains the following chart, which reveals why CBC TV, dead last among equals, is not as loved as the BBC or PBS:
Let's examine some of the other claims and assumptions in the Nordicity study of CBC advertising.
The 2011 survey results are from CMRI's Media Trends Survey conducted November-December 2011 among a representative national sample of approximately 900 Anglophone respondents aged 18-plus. Margin of error +/-3.3%. The Media Trends Survey has been conducted for ten consecutive years and has surveyed over 15,000 Canadians in total in this period. It is the only survey to have measured media use and attitudes continuously over this decade. The Media Trends Survey is not sponsored by any one industry or affiliated with a media company. Therefore, the surveys are scrupulously designed not to bias respondents into favouring one medium or media outlet over another.