Sunday, 15 April 2012

The CBC, ex-CBC Executives and ‘Factortion’

Moynihan famously said: Everyone is entitled to his own opinion, but not his own facts.”  Something very unsettling has been happening in society; facts are no longer cold, hard and indisputable.  Instead, they are being distorted and falsified by politicians, businessmen, journalists, economists and even scientists.  To win an argument, gain an advantage or influence policy, people in respected positions throughout society are willing to fabricate data and statistics, contort and distort the facts (factortion), to a degree previous generations of professionals would never have considered.  There are skilled practitioners in factortion on both the left and right of the political spectrum. The world of polling and research has, unfortunately, been on the cutting edge of the phenomenon.

A recent example of distortion of research facts is the claim by the publisher of Richard Stursbergs new book that He enjoyed the best radio, television and online ratings in CBCs history.  Mr. Stursberg, a former CBC Vice-president, reinforced these supposed facts in the Globe and Mail recently: Nearly every year since the 1970s, CBCs television audiences declined.  By 2004, its ratings were the lowest in its history. Almost nobody was watching.Starting in 2006, the CBC began to re-invent itself...The results were startling.”  He went on to say, For the last four years, CBCs overwhelmingly Canadian prime-time schedule has beaten Globals overwhelmingly American one.” 

For good measure Mr. Stursberg added, (CBC) Radio is enjoying the highest ratings in its 75-year history. Another trait of our times is to ignore history: CBC radio once dominated Canadian airwaves, providing an invaluable service to Canada leading up to, during and after the last great war, and as far as we can tell attracted mass audiences in that era.  Mr. Stursberg says he is concerned about the CBC and wants a review of its future role but are his facts and understanding of CBC correct?

Robert Rabinovitch, ex-president of CBC and the man who hired Mr. Stursberg, also wants a review of CBC and weighed in recently with this peculiar comment in the Toronto Star: Richard is extremely brighthes super-intelligent...and he increased audience share dramatically.”  A few days later Mr. Stursberg repeated in the Star that in 2004 CBC TV had its lowest ratings in history.  Toronto Life also regurgitated these claims about audiences in its last issue.

Stop the presses!  Has anyone verified these facts?  Have the publishers and editors asked the CBC for a comment or visited the CBC web site to see if these claims are true? 

The CBC is required to prepare a corporate plan, which is available on its web site.  It is submitted to the government and therefore must adhere to high standards of truthfulness.  The most recent corporate plan contains an analysis that states: While the shares of other conventional broadcasters in North America have been declining in recent years, CBC Televisions audience share has grown.  In the 2009-2010 broadcast year, CBC Televisions prime time share of 8.7 per cent was its highest in five years.”  Oddly, an accompanying chart compares the share to 8 years previously.  CBC corporate plans and other official documents from recent years show that the share has been steady at about 8-9% but there was a temporary dip 5-6 years ago caused by two factors discussed below.  CBC's quarterly performance report, another report the Corporation is required to file with the government, confirms that in 2011-12 the audience share is in the same range, between  8-9%, all according to CBC's analysis. 

Note that the CBC's analysis in the corporate plan refers to the full 52-week broadcast year.  Another way of distorting audience performance is to cherry pick and only examine certain weeks of the year. The corporate plan is provided to Treasury Board, who provide funds to CBC 52 weeks a year, not selected weeks.

There is nothing wrong with an 8-9% prime time share, maintaining market share today is an accomplishment, but why keep repeating every few years that it is the highest in history or its highest in five years?

Lets take a look at what the CBC said its TV audience share was just as Mr. Rabinovitch  took the reins at CBC, that is about 10 years ago.  (He hired Mr. Stursberg at the start of 2004.)
Its true that 2004-05, Mr. Stursberg's first year, was a very poor year for CBC TV, according to CBC's analysis shown at bottom.  The following year, 2005-06, wasnt much better.  Both years the audience share was under 8%.  Why?  Very simply, because in 2004-05 the NHL locked out its players and in August that year Mr. Rabinovitch and Mr. Stursberg locked out their employees.  Since CBC depends heavily on the NHL to maintain its audience share and on its employees in news, public affairs, etc. for much of the remaining audience, only someone very naive or determined to distort the data would compare CBCs performance to 2004-05.   The CBC's analysis shows that the year before the NHL lockout its audience share was 8.9%, more or less what CBC says it has been in recent years. In 2001-02, early in Mr. Rabinovitch's term as president, the share according to CBC's analysis was 10.0%, higher than the share of any subsequent year.   In other words, it has taken these past few years just to get within hailing distance of the audience levels CBC had at the beginning of the Rabinovitch/Stursberg reign.

In some of those earlier years CBC aired the Olympics, which gave a slight boost to its annual share but CBC lost the Olympic rights to CTV in 2010.  On the other hand, CBC's share is given a mathematical boost by a new audience ratings system, introduced in 2009, which doesn't measure the audience to many U.S. stations, so they can't be counted in share calculations today.

In essence, CBC TV audiences were never at historic highs during or following Mr. Stursberg's era.  According to the analyses CBC submitted to Parliament, CBC had as large or larger prime time audience share in 2001-02 and 2003-04, beating Global in those years with Canadian programs, equaling the results boasted about by Mr. Stursberg.  

Mr. Stursberg never refers to CBCs 24-hour audience share, which CBC's submissions to Parliament indicate is much lower, in the 5-6% range.  What would it be without hockey and U.S. game shows (which CBC began airing under Mr. Stursberg in 2008)? Think PBS. 

Then, why is it that CBC seems to have more viewers for some individual programs today than a few years ago? Well, and this is a fact that few in the TV industry want to address, it turns out that three years ago, in fall 2009, the definition of who was to be counted as being in the audience was changed dramatically by the ratings system.  The majority of programs on all networks for the past three years have had a much larger audience as a result.  Audience share wasn't much affected because almost every station's audience went up. But audiences really didn't increase, just as the temperature is not affected when one switches from Centigrade to Fahrenheit degrees.

Mr. Rabinovitch and Mr. Stursberg both began their careers as Ottawa bureaucrats and learned, as so many in Ottawa have, that if you repeat something often and loud enough, the press (and their readers) will come to believe that it must be true. 

CBC has just suffered the biggest budget cut in its history.  CBC managers argued their case to maintain its funding but members of Parliament and Ottawa bureaucrats recognize factual contortions and distortions and cut the budget.  They are past masters in the art of distorting the facts and presumably didn't believe, rightly so, what the CBC said about how Canadians use its services.  If  CBC is to right the ship and define its role in the years ahead, former and current CBC management must put an end to statistical factortion and present their strategies to the government based on the real environment the CBC faces.

I agree with Mr. Stursberg that somebody should review the role of the CBC, somebody with a deep understanding of public broadcasting, and who is equipped with clear, unadulterated facts, especially facts about what CBC programs and services Canadians use.

Note to readers: the preceding observations on audience are based entirely on CBC's published analysis of its audience performance. 

Update: Stursberg's program scheduling strategy for prime time, 7-11pm, was  quite simple.  He de-Canadianized the schedule.  In his first year he moved Coronation Street into prime time at 7pm.  In his fourth year he added Jeopardy to the prime time schedule at 7:30pm, meaning that 1 in 4 hours every weeknight was foreign programming that would attract large audiences; in the case of Jeopardy he was able to simulcast against U.S. stations, meaning that much of Jeopardy's audience wasn't actually watching a CBC station and couldn't be a 'lead-in' audience for CBC Canadian shows at 8pm.  In his fifth year he moved Wheel of Fortune to the 7pm time slot, hoping for even bigger audiences.  He aired more Hollywood movies in prime time than ever.  When it came time to reporting performance he would use the 7-11pm share numbers, which included the foreign shows, but say that "real" prime time was 8-11pm, suggesting that it was his Canadian shows that were responsible for his performance.  In his book he erroneously states that 7-11pm was defined as prime time for regulatory purposes but that it isn't real prime time.  The CRTC actually defined 6-midnight as prime time decades ago to allow broadcasters to count news in calculations of Canadian content.  The Commission today refers to 7-11pm as "peak viewing time", the hours when audiences are at their highest levels.  

Thursday, 12 April 2012

Cutting the Cord: How Many Canadians are Going to Cancel Rogers?

Netflix and Apple TV launched in Canada in September 2010.  Both services are delivered via the internet, bypassing traditional cable/satellite companies and threatening the sale of DVDs and are largely responsible for the closing of video rental stores in your neighbourhood.   

Apple has been very low key in its marketing of Apple TV while Netflix has been very aggressive and advertised extensively and today about 1 in 12 Canadians report that they are subscribers to Netflix.  Netflix offers on demand access to a large library of older movies and TV shows and some exclusive programming and costs only $8/month.  Some fear that Netflix, Apple TV and other Internet TV services will lead Canadians to cut the cord, cancel their traditional cable/satellite subscription, or at least reduce the number of channels they pay for.

CMRI's Media Trends Survey for the first time this year asked Canadians what they thought of the new ‘channel’, Netflix, which will be the subject of a future post.  We also asked Canadians if they plan on cutting the cord or reducing the channels they receive.

Only about 2% of Canadians say they are very likely to cancel cable/satellite in the next year.  I suspect that had we asked the same question in previous years, i.e., before Internet TV, the results would have been similar.  However, the 7-8% of Canadians who say that are likely to cancel may be higher than before the introduction of alternatives, such as Netflix.  Results are similar for both cable TV and satellite TV subscribers.

Outright cancellation may not be the route most people take if they decide to spend more time and money on Internet TV.  Some may simply cancel some of the channels they currently pay for, such as The Movie Network. 1 in 6 Canadians say that in the next year they will decrease the number of channels they receive via cable/satellite; satellite TV subscribers are more likely to decrease their channels.  A smaller number of cable and satellite subscribers say they will increase the channels they receive, which would offset some of the loses that Rogers, Bell and others would lose to the internet.

What do we know about potential cord cutters, other than their conventional demographic features?  First, we know that cord cutters watch somewhat less TV than the general population, which no doubt is related to decisions about cable/satellite subscription.  Surprisingly, potential cutters tend to use the internet no more or less than others.  They do, however, listen to less radio.

When it comes to Internet TV, potential cutters are more likely to subscribe to Netflix and far more likely to download video from the internet.  Not shown in the chart is that those who are considering reducing channels are twice as likely to be Netflix subscribers.

Clearly, the primary motivation for cutting the cord is dissatisfaction with TV generally and with cable TV and satellite TV in particular. 4 in 10 of those who are very likely/likely to cancel their subscription in the next year are dissatisfied with TV and roughly the same numbers are dissatisfied with cable TV. Over 1 in 2 of those planning to cancel are dissatisfied with satellite TV.  Bell, Shaw and the CRTC should make a note.

If Rogers, Shaw or Bell would like to know the intentions of their subscribers to cancel or reduce service, please contact CMRI.

In the meantime, please enjoy this attempt to get you to cancel cable:

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.

Tuesday, 3 April 2012

CBC Radio Already Cut 20%

A little known fact: about 4 years ago CRTC implemented a new policy that required all broadcasters, including CBC, to submit annual financial reports on their individual networks.  The intention was to get more information into the hands of the public and it worked, although searching the Commission's web site requires IT training. 

The CRTC financial reports are useful for understanding the revenues, expenses and staffing of CBC and other broadcasters.  All the reports issued by CBC are woefully lacking information about CBC staff.  The CBC’s annual report and the corporate plan report the number of visible minority staff but do not contain data on staff in total or by medium.  This is unusual since CBC staff account for a majority of CBC expenses, as much as 60% according to CBC president Hubert Lacroix.  The CRTC financial reports provide year-over-year comparisons of CBC staff numbers, revenues and expenses, as well as comparisons within industry sectors.

The CRTC financial reports contain data on all the licenced broadcasting outlets of CBC/Radio Canada. No where can one find the total staff numbers and a breakdown of CBC expenditures as a whole, which is extraordinary for a publicly owned company.  CRTC reports do not contain any information about unlicensed CBC activities, such as, satellite radio or internet music channels.  The latter probably accounted for approximately $100 million in annual expenses and an estimated 500-1,000 additional staff in 2010-11.  This is basically the difference between the total expenditures shown in the CBC’s April 1- March 31, 2010-11 annual report, and the results in CRTC’s financial reports. Clearly, it would be beneficial if CBC or CRTC reports were to provide data on and other such services.

One series of reports issued by the Commission contains a breakdown of CBC English and French radio and TV finances and the trends in the past 3 years reveal much about decisions that CBC management and the Board of Directors have made.

In chart form here are some CBC English highlights in the CRTC financial data 2009-2011:

-CBC English radio has had its expenditures cut by some $45 million between 2008 and 2011, which is a 20% cut; CBC English TV expenditures were basically unchanged in this period.  CBC French results are similar

 -non-staff expenditures have been reduced by almost 40% at CBC radio, whereas there has been little change at CBC TV; cuts in administration (see discussion below) account for most of the reductions. As a result staff in 2011 accounted for 74% of CBC radio expenditures

-CBC TV increased its expenses on sales (and promotion) by some $15 million to $80 million in 2011.  Could this $80 million be saved if CBC TV only carried advertising in programs specifically designed for advertising, such as NHL hockey, which don't require sales promotion?
-Both CBC English radio and TV have drastically cut administration expenses.  Radio has cut admin by 61% and TV by 37%.  Only my dyslexic accountant, who worked for Enron, would believe that you could cut admin expenses to this degree in such short order.  I would suspect him of shifting admin expenses into other categories; CBC management should offer an explanation to the CRTC and the public when it files its financial data, so that the data can fully be understood 
CRTC financial reports reflect the 'official' position of the CBC's financial state.  If the CBC data provided to CRTC are correct and not some illusion that has not been properly explained by the Corporation, then here is my take on what has occurred over the past three years:  the programming changes that have occurred in CBC radio, including the transformation of Radio 2 from a classical music format to an eclectic mixture of music (which seems to have failed to meet Hubert Lacroix's objectives), the 50% reduction in midday local programming, the numerous same week repeats of network programs, the cancellations of talent contracts for theatre critics, etc., the long periods in summer when regular programs consist of nothing but repeats, the subtle reductions in the depth of radio news and reporting have presumably all been done for one over-riding reason: to save money, money which is being used to support the CBC's television service.  Contracts for NHL hockey and U.S. game shows can't be re-negotiated mid-stream, so money has to come from somewhere to pay for them.

Postscript: Forensic accounting on the difficult to navigate web site of the CRTC is not the way the public should learn about the way the CBC is spending its resources. CBC management and its Board should provide detailed financial data in CBC's annual and quarterly reports and fully explain the fiscal strategies being followed and their effects on CBC services.