CBC 2010: The Year of the Audit

I am delighted to inform you that according to the Broadcast Act, the CBC is due for a "special examination of its financial and management control and information systems, and of its management practices" and I have downloaded and read the very informative 2005 Auditor General report. In 2004-05 the CBC reported operating expenses of over $1.5 billion dollars (which excludes "capital investments") and revenues of $547 million with the remaining 1 billion dollars approved by parliamentary appropriations. The CBC reports 1.5 billion in assets (62% of that equipment), and 1.6 billion in various liabilities (it states that there are 1.6 billion in liabilities but does not discuss what they are). The CBC also received additional parliamentary appropriations of $100 million in capital funding. In March 2005, the Corporation had about 9,700 full-time employees. They spent $154,639 per employee and generated $56,391 of revenue per employee.

Basically you have a news/entertainment entity able to generate half a billion dollars in revenue, spending 1.5 billion at a price tag to Canadians of a billion dollars. The structural flowchart of The Corporation's expenses indicates 74% goes to the "main channels", 18% "support to programming", and 8% to the "wholly owned specialty channels". An anonymous commentor claimed on a previous post that as "wholly owned", Newsworld does not (or perhaps is not allowed to) receive tax dollars, aka "parliamentary appropriations".

The 24 hour news networks claim an operating budget of $69 million dollars, compared to $884 million for the "main channels" television division. I watch more CBC Newsworld than probably 95% of Canadians. You're telling me that entire operation runs for $69 million dollars? The only way that is even remotely possible is if they dump off the bulk of their content expenses on the main channels. Ergo if you see a CBC news truck anywhere in Canada, it is almost certainly a local affiliate footing the bill in the "main channels" division even if their content is shown exclusively on Newsworld. What exactly are the legal barriers between "wholly owned" and "parliamentary appropriations"? I'm curious.

On the revenue side, they report $322 million from advertising and $225 million from other sources such as cable subscription fees, program sales, specialty channels, facilities rentals, and interest. Admittedly the Auditor General "relied on internal audits of the Corporation's capital planning process and revenue generating activities"; ergo they relied on CBC self reporting. It does specify on page 8 that "two 24 hour news and information television services financed by cable subscriptions and advertising revenue" suggesting that Newsworld is supposed to pay for itself.

The CBC is governed by a 12 person Board of Directors. It may please you to know that "the Board assessed its own performance in 2004; directors were generally satisfied with current practices" and "the Board is responsible for setting and approving the CBC strategic direction. The Corporation's strategic direction and key priorities are identified in the Corporate Plan."

Hmmm, here's a nice quote from part 62, page 17. "The Corporation itself has little control over its accountability structure. We therefore brought this issue to the attention of the Minister of Canadian Heritage after completing our special examination report in 2000. The recent review of the House of Commons Standing Committee on Canadian Heritage recognized the need to ensure the clarity of the mandates of the agencies and the programs that support Canadian broadcasting. The response of the Minister of Canadian Heritage agreed with the report of the Standing Committee on this matter. To date, no change has been made to the current accountability structure."

On page 23 it gets even more interesting with a mandated list of six performance indicators that the CBC are required to track in order to maintain quality of service. These include: 1) Weekly Reach, number of people who use each service each week 2) Weekly Share, percentage of all viewing time captured by each service 3) Essential Service, the percentage of adult Canadians who agree that it is essential that the service provided by the Corporation is available to Canadians 4) Satisfaction, the percentage of adult Canadians who agree that they are satisfied with the programming.

Excellent! I am overjoyed that the CBC tracks that data. Now where do I find it? Guess what guys, soon Stockwell is going to be signing the cheques (figuratively if not literally)...enjoy...

Here we go, on page 27 they present the Nielsen ratings from 1997 - 2005. CTV crushed the CBC. Global was marginally better. No distinction was made between Newsworld and the main channels, and there were no ratings for individual programming.

Here is a very interesting quote from page 37 "In our previous reports, we often stressed the importance of carrying out internal and external benchmarking of costs. In the current examination, we have seen no evidence that these activities have been carried out. The Corporation told us that it had attempted such internal analysis, but there were too many operating differences between the networks to make it feasible. As a result, it saw no benefit in such an exercise. The Corporation needs to be able to perform such analysis to assure management and the Board that the Corporation has effective operations and uses resources economically and efficiently." and "In our view, the Corporation needs to ensure that better information is available to understand the full financial implications of decisions and that the mechanisms for financial accountability exist and are used."

Oh, then on page 39 "about 90% of the Corporation's staff is unionized."

That explains a lot.

Hmmm, on page 41 "it has two large production facilities in Toronto and Montreal."

That also explains a lot.

There, I'm done reading all 49 pages. I feel like I should be awarded some kind of prize. This post is already long enough. I will have to save some of my analysis for later.  In the meantime, I pass the microphone to you...