Will advertising save CBC Radio?

The Canadian public broadcaster’s press release yesterday announcing its gratitude for the result of its petition to the CRTC to run ads on CBC Radio 2 and Éspace Musique reads, “CBC/Radio-Canada thanks the Commission for its work and all those Canadians who took the time to participate in the process.“

It’s clear from this statement that none of the stakeholders in this process, with their various motives, will be happy with its result.

“Those Canadians” a population that a group called Friends of Canadian Broadcasting claims to represent, issued a press release of their own, decrying the CRTC’s decision and pointing out that “The CBC’s proposal to place ads on some of its radio networks was opposed by the vast majority (893 out of 965) of those who intervened during the licence review hearing on this topic.” So they’re not happy, and a clear majority of them were actively ignored.

The CBC’s audience is composed mainly of precisely the kind of person who listens because the network is ad-free, a demographic who won’t be pleased with either the CBC’s petition to run ads, or the CRTC’s decision to allow them to do so.

“In choosing to ignore the advice of 93% of the citizens who took the trouble to comment on the CBC’s proposal to place ads on its radio services, the decision sets CBC Radio on a slippery slope,” said Ian Morrison, spokesman for watchdog group the Friends of Canadian Broadcasting.

The CBC’s audience is composed mainly of precisely the kind of person who listens because the network is ad-free, a demographic who won’t be pleased with either the CBC’s petition to run ads, or the CRTC’s decision to allow them to do so.

The CBC had requested eight to nine minutes per hour of advertising. The CRTC granted four, with the possibility of future expansion.

Private broadcasters have always been unhappy with the fact that the publicly funded broadcaster competes with them for the same television advertising spots. Now, the same discontent is being voiced by private radio.

“The advertising pie is only so big,” observed Ross Porter, ex-CBC Radio host and current CEO of Jazz 91FM, and today’s decision allows another player to “belly up to the trough.”

$115 million in federal subsidy has been cut from CBC’s budget over last three years. But that cut alone is likely to be the least of the broadcaster’s funding problems in the near future.

Next year, the network stands to lose the approximately $200 million in revenue generated by its flagship cash cow Hockey Night in Canada. HNIC accounts for approximately 30-40% of the network’s annual primetime ad revenue, so its loss would seriously impair other aspects of the network, primarily journalism.

CBC will at least be able at that time to point to its successful handling of the Sochi Olympic coverage, which it won broadcast rights to in partnership with Bell Media. However, given that CBC managed to lose rights to Hockey Night’s iconic theme song, assuming it is guaranteed to retain HNIC and its revenue would be a foolish bet.

CBC Music, in the meantime, is already engaged in a slippery form of cross-platform advertising with CBC Radio 3. CBC’s Music app currently features a VW logo on its front page, a cross-sponsorship with ex-indie rocker and current Radio 3 host Grant Lawrence’s musical “road trip” across Canada, sponsored by Volkswagen, in which he drives a VW bug cross-country.

Today’s decision was not unanimous on the part of the CRTC. Dissenting Vice Chair Tom Pentefountas wrote, “…it’s a very slippery slope once the door is opened to the commercialization of public radio, and second, it seems crystal clear to me that the commercialization of Éspace Musique and Radio 2 will trigger the disappearance of the distinct and complementary character of those services.”

CBC Radio listeners will also not deliver a unanimous vote: some will hate the ads and some will see them as a necessary evil. The real question is whether or not the move will erode the broadcaster’s users base to the extent that the exercise will effectively become a zero sum game.