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Report On Business CBC executives tell CRTC it can no longer afford to be free

Canada's public broadcaster says it can no longer afford to offer its television programming for free over the air as its advertising revenue deteriorates, and it wants cable and satellite companies to start paying for its signals.

On Friday, Canadian Broadcasting Corp. executives told the federal regulator it is time to turn off free signals and allow conventional TV stations such as CBC and CTV to charge distributors a fee for carrying their channels in basic packages – even if that cost is passed on to customers.

The CBC's argument echoes arguments BCE Inc. presented earlier this week before the Canadian Radio-television and Telecommunications Commission (CRTC), which is holding a major two-week hearing into the future of Canada's television industry, called Let's Talk TV. Both companies argued local television is suffering and unsustainable under current rules, after the CRTC floated a proposal to allow local over-the-air signals to be shut down. (BCE owns 15 per cent of The Globe and Mail.)

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"Conventional television still remains at the heart of the broadcasting system, but its business model is broken," Hubert Lacroix, president and CEO of the CBC, told the Commission.

The notion that CBC's channels could be restricted only to those with a cable, satellite or Internet subscription raises fundamental questions about a publicly funded broadcaster's role and the rights of over-the-air viewers, many of whom live in remote areas and have low or fixed incomes.

The CRTC's own analysis of thousands of submissions ahead of the hearing suggests Canadians still value over-the-air signals, even though only about 5 per cent still access them, through antennas. Chairman Jean-Pierre Blais pressed the CBC about how it would explain to viewers that they would have to pay $25 to $30 a month to subscribe to cable or satellite to keep CBC TV, when many see free access to public broadcasting "as almost a constitutional right."

"It's not free" to produce, replied Steve Guiton, CBC's vice-president of technology and chief regulatory officer, "and it's been funded by a specific model, which is advertising." He used Via Rail Canada Inc. and public transit as examples of services that are similarly heavily subsidized by taxpayers.

"Whenever I get on a Via train, I don't assume I get a seat for free," Mr. Guiton said.

When Mr. Blais suggested some viewers might argue CBC would be "taking the bus off the roads completely" and should use its public subsidy to avoid that, Mr. Lacroix replied that advertising has long been a pillar of the CBC's "hybrid" funding model.

"The bus is on the side of the road, and it's not going fast enough," Mr. Lacroix said, warning the quality of content on conventional stations is now in peril.

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The CBC earned about $331-million in advertising revenue in 2013, down more than 11 per cent from 2012, and a large part of that revenue will vanish this year after it lost NHL hockey broadcast rights to Rogers Communications Inc.

But ditching over-the-air TV channels, particularly CBC's, would be "a betrayal of the public trust" and could spur a backlash beyond the 1.5 million-plus people who still use them, said Ian Morrison, spokesperson for the advocacy group Friends of Canadian Broadcasting.

"If you get the vast majority of people saying it is a right, well then anybody who's going to trample on that is going to get in trouble," he said.

But Christopher Waddell, an associate professor of journalism at Carleton University and former CBC executive producer, thinks Mr. Guiton's public transit analogy is reasonable given dwindling over-the-air viewership and the corporation's collapsing ad revenues. And it "may be outdated" to think the way a broadcaster delivers its programs is what makes it "public."

"It's a nice concept to say, 'yes, it should be free, and yes, stuff was free for a long time, too,' but I think we're in a different world [today]," Mr. Waddell said. "… Maybe it's time to think of public broadcasting as more about content and a different philosophy" compared with private broadcasters.

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