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The Globe and Mail

Grim scenario for CBC if ads dropped, study says

CBC president Hubert Lacroix responds to a question during an interview in Ottawa on Oct 5, 2011.

Sean Kilpatrick/CP

Removing advertising from the CBC would greatly lower the quality of the public broadcaster's programming and eliminate about 3,600 jobs in independent Canadian television production, according to a new study.

The study, commissioned by the CBC itself, also suggests that removing ads would result in a downward spiral – and increasing questions from Parliament on whether a hobbled broadcaster could fulfill its mandate and provide value for its annual $1.1-billion subsidy.

The study is part of the CBC's response to critics who are floating contrasting models for the broadcaster, suggesting that it should either be privatized or eliminate all advertising.

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"If we ground the conversation in facts, we can have a better conversation," CBC CEO Hubert Lacroix said in media conference call about the study. "This is about elevating the conversation instead of bringing it down to tit for tat."

The study, prepared independently by the Nordicity research company, depicts a grim scenario in which CBC/Radio Canada would lose about $360-million in revenue, but also face $190-million in increased programming costs to fill the airtime once occupied by ads. If the broadcaster spread those losses – of about $550-million – over all programming, the quality of its television schedules would suffer. This would lead to fewer viewers, and in turn less access to money from the Canadian Media Fund, which allocates programming grants partly based on ratings.

Meanwhile, commercial broadcasters, who might expect a windfall in new ad revenue, would not pick up the slack on the production side because the public broadcaster spends a higher percentage of its revenues on Canadian programming while the commercial broadcasters spend more abroad. The result would be the job losses associated with $159-million less spending on independent television production.

When other governments, such as France, have dropped ads from their public broadcasters, they have then taxed the commercial broadcasters' windfall. This study, however, assumes no policy change other than cutting advertising. It does note, though, that not all the lost ad revenue would go to the private broadcasters; some of it would leak out to other media both in Canada and outside the country, or simply disappear altogether.

"There is no good public policy reason to eliminate or seriously reduce our advertising dollars from our television networks," Lacroix said.

The study also covered a second scenario in which the CBC would keep ads on sports programming, which is expensive to buy but produces high ratings and thus high ad revenues. Under this scenario, the shortfall in the CBC's budget would drop by about $150-million, reducing it from about $550-million to almost $400-million.

The study examined international broadcasters including PBS and concluded that the American public broadcaster's loose affiliation of regional stations heavily dependent on charitable donations would be very difficult to reproduce in Canada and that model would reduce the CBC to a niche service.

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