Memo to: Ms.
Jade Roy, Supervisor, Public Hearings, CRTC
Morrison, Spokesperson, Friends of Canadian Broadcasting
During the question period following the
presentation by Friends of Canadian Broadcasting on November 23rd,
the Commission asked me to file the analysis underlying our statements
regarding projected revenues should the Commission approve the Corporation's
proposal to introduce commercials on Radio Two and Espace Musique.
That analysis, commissioned by Friends from
Canadian Media Research Inc., accompanies this email (CMRI.AdRevenues.nov27.pdf). By way of summary and introduction, we
wish to bring the following points to the Commission's attention:
1. As set forth in paragraph 19 of this CMRI report, at a conservative
estimated sales rate of 60% of the average English private station, Radio Two
would earn $29.3M in ad revenue by 2015, compared to $22.9M as projected by CBC
- a difference of almost 30%.
2. The same paragraph shows that, at a similar estimated sales rate of just
60% of the average French private station, Espace Musique would earn $11.1M in
ad revenue by 2015, compared to the Corporation's projection of $1.7M - a
difference of some 550%.
3. This suggests that the detrimental impact of the CBC's proposals on
private station revenues would be considerably greater than the Corporation has
4. It is also important to underline that the CBC's own research, conducted
by Strategic Inc. and filed with the CRTC during the present hearing at the
Commission's request, confirms, on p. 8, that "almost one out of two" regular
Radio Two listeners "will tune much less if commercials are aired."
5. This constitutes a devastating critique of the CBC's proposals from an
audience service perspective, and suggests that the CBC would be forced to
further modify the formats of these networks in order to maintain their
popularity, commercial appeal and revenue-generating potential - thus leading
them even further astray from a public service orientation.
6. We note that in most Western democracies, national public broadcasters
operate non-commercial radio services focusing on world classical culture,
including, for example: the United States, the United Kingdom, Australia,
Germany, the Netherlands, Portugal, Italy and Hungary.
7. Finally, it should be noted that the CMRI analysis includes, at Friends'
request, parallel projections of the potential revenue, should CBC apply to place
ads on Radio One and La Première Chaîne.
By Year Three, using the same conservative assumptions, these networks
could generate $142.7M and $36.4M respectively.
8. We express a strong concern that, given the CBC's current and
anticipated financial challenges, and notwithstanding its protestations to the
contrary, the Corporation will find it difficult or impossible to resist for
very long the temptation to take advantage of this much more significant source
of income, if the Commission opens the door by permitting ads on other CBC