CBC's CEO update on cuts

The thing about Hubert Lacroix is he comes off as a straight talker. Whether it's genuine or all for show, it does make him personable, which helps with the conversation.

-D

Hubert T. Lacroix: Answers to a few of your questions

March 31, 2009 - Last week was a long and difficult week for all of us.

I know that you got, and are still getting, more details on how the changes will affect our operations from your respective management teams. We still have a lot to work through and talk through. We’ll keep doing that.

On financial flexibility

People have been asking if we still would have had to cut jobs if we’d received a $125 million bridge loan from government. Our shortfall was too important ($171 million) to only handle it through this bridge loan. The only way for us to not have seen job cuts would have been to receive new, additional and permanent funding to make up for the loss of our advertising revenue and the other budgetary pressures I talked about. We knew that additional funding wasn’t in the cards and wasn’t realistic, particularly in this Canada-wide financial context, so we did not ask for it. We built a plan to show that we could reimburse our requested loan over a five to seven-year horizon based on conservative and thus achievable revenue projections. That’s how we determined our $125 million request: we were, and still are, very confident that we could borrow $125 million and repay it over that time period and not risk endangering our corporation even more.

Our bridge loan would have helped us reduce the effect of the shortfall on our people and our programs. If received when requested, we could have implemented our reorganization plan sooner and accelerated its savings; a simple calculation shows that the cost per week of this reorganization not being started is about $3 million per week (remember that there is $158 million of budgetary pressures in the $171 million; take this $158 million and divide it by 52 to get the cost per week of not acting on the plan).

The alternative of selling our assets is also less attractive because it means that money we would be receiving over the next few years will disappear. We will be taking it now to provide our own bridge.

How many less jobs? How many programs saved? Frankly, I can’t answer that question exactly. Best way though is to start from 800 and work backwards. Cuts would have been important but it would have been easier to manage the downsizing and reduce its effects.

Strategic investment and re-investment

A second issue I wanted to touch on is whether, if our financial situation improves and can be sustained, we will reinvest it in the places we’ve cut. The answer is yes and no. Not a really good answer but let me explain.

All funds would (and should!) be directed toward things that push our strategic direction forward: in things that enable us to become a content company, to become the most important creator and distributor of Canadian content across all platforms, and to be deeply rooted in the regions.

These are the principles that will guide future investment and re-investment. So, would we invest and re-invest, for example, in our regional roots, presence and visibility? Absolutely. Would we necessarily reinstate a particular program or position in a particular place? Not so much.

Would it mean that we would reinstate the same number of positions in each station, exactly as we were staffed before the announcements? Not exactly. Some stations, some centers would perhaps get their resources back sooner than others, depending on markets, other media alternatives, strength of ad revenue potential, fairness between the communities served by CBC/Radio-Canada, costs relative to re-staffing, etc.

Would it mean that we would necessarily reinstate a particular program? Same yes or no answer as above, for the same reasons.

But I would again state: impossible for us to be a national public broadcaster without being deeply rooted in the regions. I know that some you are looking at the choices we made last week and saying: “Lacroix, we don’t believe you anymore! How can you say this when you cut 17 positions in Nova Scotia, or 13 in Windsor, or 8 in Sudbury, or the only person in La Ronge?” You won’t like my answer: because we had to make difficult cuts and attempted, as best we could, to keep our presence in the regions. And we thought that we would do this by protecting our footprint.

The $60 million envelope

In case you haven’t heard about it, our Minister has now confirmed that CBC/Radio-Canada would in 2009-2010 be receiving the $60 million in non-recurring funding for programming initiatives that it has received each year since 2001. This amount was already included in our 2009-2010 budget. This confirmation doesn’t improve our current situation but not having received it would have been catastrophic. We are grateful for this announcement.

Voluntary Retirement Incentive Program

Some of you have also been asking about the Voluntary Retirement Incentive Program, which the Minister approved last Friday. About 780 of you are eligible for it, so I won’t get into the details here, but you can find out more here. And, if you’re eligible, you can also expect to receive a personalized information package in the mail.

Notes from CBC Radio

Denise Donlon is a highly respected manager of CBC English Radio. Here's the email she sent CBC English Radio employees today (emphasis mine):

Hello Radio folks!!

Now that we've had a few days to digest all the news, I thought a note with some context around the changes to radio might be helpful. I know it's all very new, and our challenges many, but first I want to thank you for being so patient and professional over the last couple of days. We’ve got a lot of work to do as we weather this storm and it’s going to require a lot of energy and creativity and positive thinking to be successful. You are no doubt still feeling bruised from the news of last week, but it's precisely the same kind of positive energy and creativity that you pour into our programming already that will help to achieve what we've got to do.

Our plan was created on the basis that CBC operates as one content company. As radio, television, online merge ever more closely to become a multi platformed content company, we see our future more clearly and are reminded that it’s our job to serve Canadians not only with the most robust, thoughtful, innovative and compelling content ever, but deliver it wherever, whenever and however they want it. And we're really good at it! As you know, we're experiencing higher than ever audiences. We do it in English and French, in 8 aboriginal languages, across the time zones and round the world and we do it with increasing costs, no new $, in the midst of an economic meltdown, practically standing on one foot!

And yet, there are critics who think we’re fat. They think we’re over resourced and bureaucratic and slow. But I have to tell you, in my tiny tenure here, I’ve had a moment to look under the hood, and compared with my experiences elsewhere, FAT, WE ARE NOT! What you manage to produce in radio from coast to coast and is comprehensive and impressive. I apologize that I haven’t been able to meet you all at this point, but I expect you know now what I've been up to since I arrived - looking at numbers, reading the research, pouring over the data, and endeavouring to be a positive force at the table.

You should know that as this financial challenge was faced, the process was deep and consultative. All managers/media lines/regions and networks came together to tackle the problem together. It was all hands on deck across the company where hours were spent together collectively to formulate a plan. In Radio, Chris and Ted and I joined with the managers of the programming units and the people who lead the stations. We put our heads down with all your MD’s across the regions and we wrestled with the challenges. Not only with ourselves but between media lines.

We decided that across the board cuts would downgrade ALL our programs equally, and were not strategic. So what to do? The approach was to stay on strategy and protect the core of what Canadians value and position ourselves for the future.

That there are no easy solutions is an understatement. So we looked at everything. We looked at what value metrics we would make decisions against. We reminded ourselves of what aspects of our programming Cdns hold dear and looked at ratings and reach and share. We looked at where our highest audiences were vs the overall cost of the program. We looked at program areas that we provide that no one else does and we looked at WHERE we provided it – from tiny populations in the North to coastal towns to big cities hugging the border. We looked at the breadth and depth of content that CBC radio provides as journalists, storytellers, and communicators and did an overall inventory of our resources and our programs. We asked ourselves if the balance seemed right? Ultimately we decided that putting some programming resources on subsistence level was far preferred to cancellations and closures. We endeavoured to cut in such a way that hopefully, one day, we might be in a position to rebuild across the regions.

We looked at the network but found we couldn't get all the savings we needed, so we had to move to the regions. You should know that the discussion around impacting the regions was very vigorous and the MD’s were there and heard. To be frank, the size and seriousness of this financial challenge was such, that there was a moment when the complete closure of 13 small and medium markets across the country was on the table. The discussion ultimately underscored and reaffirmed the importance of the regions and who we are as a public broadcaster. I’m very glad about that. Local CBC radio is in the DNA of who we are as Canadians and the glue that connects our small communities to each other and to Canada as a whole. We protected the North, and while there are cuts there too, no bureaus in the North will close. We will shrink and it will be difficult but WE WILL NOT disappear and we hope one day to reinvest - perhaps in existing communities where we can, but also into new regions across the country that have grown to a size that deserve local CBC radio coverage but we haven’t had the resources to go there yet.

And so, you've now seen the plan. This is a lot of change. The next months will be very difficult. It will be hard for our colleagues who’ll be leaving and for those of you who will carry on. I know you’re sad and frustrated and you'll look hard at the choices, agreeing with some and disagreeing with others. I would like to reiterate what I think I said at last week's town hall, which is, please guard against 'Us vs Us'. It's not Radio vs TV or Entertainment vs News, French vs English or Network vs Regions. If we spend too much energy venting our frustrations and pointing fingers, the less successful we will be. We need solidarity now more than ever before.

The climate is not good . If you take even a cursory look at Blogs or letters to the editor there's some nasty invective and even more scary ambivalence out there. I've heard politicians practically spit out the words 'One Billion Dollars' . It's an inflammatory figure especially when you consider that it's actually approx. $34 per Cdn a year. For just $3 a month ( compare THAT to your cable bill! ) you get CBC TV, Radio Canada, CBC.ca, Newsworld, Radio One, 2, 3, RDI, Premier Chaine, French and English, in 5 ½ time zones, in 8 aboriginal languages, foreign journalists and much, much more!!. CBC IS THE DEAL OF THE CENTURY! As well, we're one of the lowest resourced public broadcasters in the world. Many have asked me for the info on that, so I've attached the graph and a link to the annual report below .

I know you’re proud of what we do. We stand for journalistic integrity and diversity and community reflection and depth and context and analysis, all the things we need from media now more than ever. After many months of number crunching, there is a plan and we can now start to talk together about how we are going to move forward. We'll re-imagine the ways we work and strive to offer our content in all the new ways available to us.

We may have less resources, but our mission remains the same. To serve Canadians as a strong, vital and vibrant public broadcaster. And there's no question we can do it. Those of you that I’ve had a moment to spend time with, are some of the most capable and talented and fun and full on people I’ve ever met. I’m buoyed by your endless creativity and respect the absolute integrity of your work. Thank you ALL, and remember if it falters, no one will build it again.

Keep the Faith,

Denise

For the record, I trust Denise.

Oh, and here's the graph that was added to the email (CBC is the red bar, obviously):