CBC/Radio Canada asks for $400M in increased government funding to go ad-free

CBC/Radio Canada has submitted a position paper to the federal government proposing the public broadcaster move to an ad-free model, similar to the one used to pay for the BBC in the United Kingdom, at a cost of about $400 million in additional funding.

"We are at a critical juncture in our evolution, continuing to operate under a business model and cultural policy framework that is profoundly broken," says the CBC's document, released on Monday afternoon. "At the same time, other nations are moving their cultural agendas forward successfully — and reaping the benefits of strong, stable, well-funded public broadcasters."

The additional money CBC is asking for would largely be "replacement funding" if the media organization eliminates advertising. The proposal requests $318 million to replace advertising revenue: $253 million in lost ad sales plus $105 million to "produce and procure additional Canadian content" to fill the programming gaps in their absence. CBC is also asking for $100 million in "additional funding of new investments to face consumer and technology disruption."

However, the proposal notes that removing ads will also result in savings of $40 million in the cost of selling advertising.

Total government funding for CBC would equal an investment of $46 per Canadian every year — up from the current $34 per Canadian it currently receives, the document says. 

• Read the full CBC/Radio Canada proposal

Ad revenue criticism

The proposal, titled A Creative Canada: Strengthening Canadian Culture in a Digital World, comes in the midst of calls from some private media outlets for the public broadcaster to stop selling digital ads on the CBC.ca website.

Critics have said that the CBC is taking ad revenue away from private media that are struggling financially.

But CBC/Radio Canada president Hubert Lacroix rejected that argument in a Nov. 21 letter to the parliamentary standing committee on Canadian heritage, saying that its digital advertising revenue only amounts to $25 million, "just 10 per cent" of its total ad sales of $253 million.

"It is difficult to believe, as some media have suggested, that if only CBC/Radio-Canada was prevented from earning $25 million, their problems would be solved," Lacroix wrote.

But on Monday, Lacroix said calculations indicated that if CBC as a whole moved away from ads, it would make a difference for the media industry. 

"About two-thirds of our ad revenues would flow to the privates," Lacroix said in an interview.  "I think they would benefit." 

That would amount to about $158 million for other Canadian media companies, he said, noting that the calculation was performed by policy and economic consulting firm Nordicity.      

The proposal says there would be additional broader benefits to the Canadian economy, including "a net total GDP gain of $488M, a total labour income impact of $355M and the creation of 7,200 new jobs."

CBC came under fire last week from two federal Conservative leadership candidates. Kellie Leitch said the CBC "needs to be dismantled," while rival Maxime Bernier said the public broadcaster's mandate should be reformed and its funding cut. Bernier also said it should not be allowed to sell private advertising. 

• Conservative leadership candidate Kellie Leitch pitches plan to scrap CBC
• Maxime Bernier proposes streamlined CBC mandate and end to advertising

Leitch reacted swiftly to Monday's proposal on Twitter, inviting people to sign a "Bye-bye CBC" online petition. 

The Liberal government has already restored $150 million per year in CBC funding previously cut by Stephen Harper's Conservatives.

• Budget boosts funding to Canada Council, CBC

However, the CBC/Radio Canada document says that wasn't enough, claiming an inflation rate of 1.5 per cent per year would erode that investment and eliminate its benefit in six years.

Former Conservative cabinet minister Jason Kenney criticized the CBC's proposal, tweeting, "It's never enough."

Scott Hennig, a spokesman for the Canadian Taxpayers Federation, was critical of the funding proposal. "At a time when the federal government is borrowing $71 million each day, making CBC ad-free shouldn't be at the top of the priority list." 

The CBC/Radio Canada proposal says the U.K.'s investment in the cultural industry, which includes the BBC, is "an inspiration" for the new funding model. 

The CBC is the "third worst funded public broadcaster in the world among comparable countries," the proposal says, with only New Zealand and the U.S. receiving lower per capita funding. 

According to the proposal, the U.K. spends $114 per person per year on the BBC, compared with Canada's spending of $34 per person for the CBC.