The news media in Canada is in crisis. Policy responses to date are failing to solve for the information that citizens need to make informed decisions about important issues and debates. The Future of News series brings together leading practitioners, scholars, and thinkers to imagine new business models, policy responses, and journalistic content that can support a dynamic future for news in Canada.
This week, Richard Stursberg, a former senior CBC executive, has written for The Hub in favour of a new mandate for the public broadcaster that clarifies its functions and purposes. How should it interact with the private sector? What’s the proper funding balance between its English and French arms? Should it rationalize or expand the communities in which it is present? “A mandate with teeth” as he puts it, would aim to answer these types of questions.
He’s right to argue that successive governments have failed to articulate a clear vision for the CBC and its role in Canada’s broader news and entertainment marketplace. As a result, it’s sort of muddled by for the past couple of decades through the rise of the internet, a fluctuating public appropriation, and a more polarized media and political environment. A first-principles articulation of what the public broadcaster is (and ought to be) would presumably help.
Yet the starting point for a review of the CBC must go further. It should test the basic idea of a public broadcaster itself by returning to the initial case for government intervention in news and entertainment and judging whether it’s still applicable. The most important question, in other words, shouldn’t be “What is the CBC?” but rather “Do we still need the CBC?”
The initial policy rationale for the CBC was what economists refer to as a “market failure.” The basic idea was that the market alone wouldn’t bring radio and then television broadcasting to sparsely-populated parts of the country because a combination of market size and technological limits precluded the private sector from doing so profitably. The CBC stepped into the market gap and provided these services to Canadian households regardless of where they lived. This was a textbook case of the state correcting for a market failure and therefore a justifiable instance of government intervention even according to neoclassical economic thinking.
Yet one of the biggest problems with this type of government intervention is that it’s rarely revisited. The initial conditions that justified such a policy action are assumed to remain static. New competitors or technologies are ignored away. Government policy seemingly takes on an inner logic that preferences self-perpetuation over evidence and facts. As Milton Friedman famously said, “Nothing is so permanent than a temporary government program.”
But of course, the market is far from static. It’s highly dynamic even in sectors that start with high barriers to entry and low competition. Innovation and technology can have the effect of changing the economic fundamentals.
The CBC is a good example. The internet wasn’t around for roughly the first 55 years of its existence. Yet over the past 30 years or so, it has fundamentally reshaped the market in which the public broadcaster operates. Improvements in broadband technology, the advent of digital streaming services, and new sources of news and information (including the rise of podcasts) have massively expanded the options for consumers including those living in places that the market couldn’t previously reach.
One consequence of these developments is that the policy case for the CBC itself—particularly its current size, scope, and configuration—has diminished. Yet the public broadcaster has mostly escaped policy scrutiny and instead gone about its business as usual including even expanding into the digital streaming market.
Today the CBC is, as regular Hub contributor Peter Menzies recently wrote, “a publicly funded commercial news and entertainment organization.” The best means to evaluate its ongoing policy justification is to assess whether there are still market failures across its different business lines. Going piece by piece can enable policymakers to judge what parts of the CBC are still rooted in its initial policy rationale and which ones have been superseded by broader market developments.
Start with CBC Television which comprises fourteen owned-and-operated stations in English Canada. Not only is its market share (4.4 percent) falling (it was 7.6 percent in 2018) but it’s now even below the CBC’s own targets. Put differently: more than 95 percent of Canadian households aren’t tuning into the CBC’s English language prime-time programming.
This shouldn’t be a big surprise. CBC Television was created for an era of content scarcity. It’s the equivalent of eating war-time rations. We now live in a world of ubiquitous content including extraordinary original production at Netflix and the other streaming services. In this context, who’s choosing to watch Family Feud Canada or 22 Minutes? The answer is a small and declining share of the population which itself is a telling sign that CBC Television is no longer needed.
CBC Radio’s market share (14.2 percent) is larger but the medium itself is in decline and the policy case for a public radio broadcaster is even weaker. Most of CBC Radio now effectively double as podcasts which are the most democratized part of the news and entertainment marketplace. Anyone with a cell phone and a voice can effectively have a podcast. We’re awash with them. What therefore is the public policy rationale to dedicate scarce public resources for the CBC to produce 142 separate podcasts? The short answer is there isn’t one.
News and information would be in the minds of the CBC’s proponents the strongest case for an ongoing role for the public broadcaster. In a forthcoming episode of Hub Dialogues, Senator Paula Simons, for instance, argues that there’s a self-evident market failure in journalism that necessitates the CBC. The argument that she and others make is that at present there isn’t a market basis for the production of news at the local level—particularly in smaller markets. Simons distinguishes between Toronto which still has still multiple private news outlets and Edmonton which has seen significant market consolidation in newspapers and radio.
There are two problems however with this line of argument. First, the CBC’s current footprint only extends to about 40 cities and communities which mostly includes provincial capitals and other key population centres. It’s not really solving for where the strongest case for a market failure exists in secondary and rural communities. Although last year’s addition of 14 journalists in communities like Cranbook, Lethbridge, and Kingston were nods in this direction, it would require a far more fundamental reconfiguration of the CBC’s staffing and operations to reposition the broadcaster as primarily focused on delivering news and information for smaller markets.
Second, as I’ve previously written, the CBC’s local coverage isn’t the type of bread-and-butter journalism that’s arguably a public good. Instead, it’s primarily focused on niche issues and perspectives that may be interesting and even worthy of attention but don’t the fill informational void about town council debates, local sports events, or other basic civic developments. The major factor here is ostensibly the self-selection bias of the CBC’s journalists themselves. It’s not obvious therefore that a new mandate alone would be sufficient to change it. It would require a culture change that due to its institutional ethos and norms may ultimately prove impossible to achieve.
The upshot: if a mandate review of the CBC starts from the premise that there must be a policy case for its ongoing presence in the market and then follows an evidence-based process to evaluate its various business lines against the test of a market failure, it should lead in the direction of something much different and far smaller than the status quo.
Such an outcome would no doubt be controversial among the minority share of the population that still consumes CBC content or those who have an ideological attachment to the public broadcaster as part of a national identity. But public policy should follow evidence rather than emotion and scarce public dollars should go to public goods rather than subsidize podcasts. The right mandate for the CBC may therefore in fact be no mandate at all.
The Future of News series is supported by The Hub’s foundation donors and Meta.
