The trouble at the CBC

We’ve made a lot of posts recently on how the CBC, through all the latest shenanigans with confidence votes, allegations of bribery and so forth, has cast aside all objectivism and launched itself into partisan politics, on your dime, on behalf of the Liberals. To anyone with a working knowledge of economics this comes as no great surprise, and here I shall attempt to go a little deeper into the workings of it and reasons behind it.

First, we all know that the CBC receives tax money, but how much? This past fiscal year, the government has allocated $927.4m to the CBC. That’s the salary of over 19,300 trained Ontario Provincial Police Constables, or 12,200 doctors in B.C. This is in addition to contributions from the Canadian Television Fund (CTF), the World Documentary Fund (WDF), the National Film Board (NFB), tax credits etc. About $263m comes from airing the Athens Olympics; RDI, CBC Newsworld, Galaxie and other leases and services. Only $277.8m comes from advertising revenue. It has also made money from some shady deals, for instance, the secretive sale of the $2bn Broadcasting Centre parking lot (which was Crown property) to Cadillac Fairview in 2003 for $65m.

CBC advertising revenue has plummeted by 11% this year, due mostly to the lack of NHL coverage. What the CBC is essentially doing is taking revenue from popular programmes to subsidise unpopular ones. CEO Carole Taylor made a speech to the Standing Committee on Canadian Heritage in which she admitted that increases in CBC funding over the last decade had not been accompanied by any increase in the audience. In fact, she stated that French prime-time viewing had declined by 10%. This would support that idea, since if increased funding does not create increased viewing, it follows that those new programmes must not be popular or at least, no more popular than the cheaper ones they replaced.

Private broadcasters are not having such problems. CanWest Global posted $672m in advertising sales, well over double the CBC’s take, up 7% from 2002. CTV recorded $637m, up 14%, and CHUM took $194m, up 16%. The reason is that private broadcasters put on shows that the public likes to watch, whereas the CBC, in good collectivist fashion, puts on a lot of shows that it merely thinks the public ought to watch. The other thing to note here is that, despite the fact that both Global and CTV are far more popular than the CBC and receive far more money when it is freely given, the CBC remains the dominant player not because it has been judged superior in the market by consumers, but because it can coerce money out of its viewers rather than actually fulfill their desires.

It isn’t even true that the CBC is a great bastion of Canadian culture. Just looking through today’s program guide, only about 7 hours of time are actually given to Canadian programmes. Most of that is CBC news and current events. Apparently, “preserving Canadian values” is well served with 30 minutes of The Simpsons, a full hour of Coronation Street, and so on. There is nothing to indicate that the CBC is a better guardian of Canadian culture than free-market offerings from Global or CTV. The CBC touts certain programmes as being great Canadian content that are, in my opinion, rubbish. Anybody who feels that Royal Canadian Air Farce and This Hour Has 22 Minutes are good political satires should really take a trip to Britain and make the effort to see the genre done right in programmes like Spitting Image, Rory Bremner, Have I Got News For You, and The Mark Thomas Comedy Product.

Indeed, it is rather silly to be attempting to define Canadian culture from above. Canadian culture is defined by Canadians, and if they prefer to watch American shows, why is that necessarily wrong? To presume that they shouldn’t is to tell them that the views of the bureaucrats at the CBC are more valid than theirs and should therefore be forced upon them. Quite tyrannical.

Economically, the problem of bad and unpopular programming being paid for with tax dollars can be explained by the essential removal of the price mechanism from any public enterprise. In the market, demand accompanies revenue. Falling demand means falling revenues, and any company that wants to do well had better provide what the consumers demand. The CBC, however, gets its tax dollars regardless (well, not quite regardless - we’ll get to that) and so has no incentive to provide popular programmes. In fact, because so many of its programmes generate no appreciable revenue stream, it can’t even tell which programmes are popular. Surveys may be somewhat helpful, but you tend to get different answers when it’s real money on the line.

That brings us to the problem of the partisan nature of the CBC. It’s not quite true that the CBC gets its tax dollars regardless of anything. Their money is allocated by the government, so to guarantee a continued flow of money, the CBC can either rely on the altruism of that government (or rather, the forced altruism it inflicts on the taxpayer) in continuing to support a network that may not always support it in return, or it can actually try to make itself useful to the government, in effect, to sell the government a service. That latter is far easier, and watching the CBC repeatedly choose that path is a living example of an Iron Law of economics at work. People are like water, they choose the path of least resistance. Faced with the alternatives of lobbying for funds from a hostile government or with competing in the marketplace against Global and CTV’s wolves, the CBC executives choose the easy course of providing a service to the government which it can buy with tax dollars. Another tendency of the economy is that people primarily serve themselves. In the free market, that’s not a problem: the desire of people to make better lives forms Adam Smith’s invisible hand that works to make our collective welfare better. However, in the CBC, objective journalism and public service are frequently at odds with self-preservation. To report honestly and unambiguously on government misdeeds may be virtuous, but may also lead to funding cuts that will cost jobs. Precious few people at the CBC will be willing to lay their careers and livelihoods on the line for the public good. This, of course, is the most massive fallacy of collectivism. The CBC, like Communism, will work in the public interest as long as men are angels. Of course, they never were, and never will be, and as Communist regimes round up their citizens for massacre, the CBC becomes a mere tool of the State and its ruling party.