The Canadian Government is Bailing Out the CBC Again

The Canadian government, in releasing their budget for the year, has announced that it is bailing out the CBC.

The CBC is a government funded media corporation. Every year, they receive billions of dollars of taxpayer money to continue funding their efforts. Over top of it, the CBC also generates millions in ad revenue. Some have argued that if the CBC is already funded by the government, then they shouldn’t also be offering advertising services on top of it all because private companies have to compete against such services in the process.

When the Online News Act became a catastrophic failure, the federal government, hilariously believing that this was all about saving Canadian jobs, issued massive bailouts to the media companies. This in a last ditch effort to shore up the losses the media companies were claiming to be having. It was the last tool the government had in the chest and with the Online News Act going sideways, they did not hesitate to use it in order to prop up the legacy media companies.

Little did the government know (and they were seemingly the only ones in the debate that didn’t know) was that the Online News Act had nothing to do with saving Canadian jobs. It was just a massive (and very successful) scam to rip off either the government or the large platforms in an effort to get a truckload of free money. With the platforms not exactly playing ball, the government was going to be the one to get ripped off. With the scam completed, large media companies then unleashed the torrent of pink slips they had intended on unleashing all along. The CBC slashed 10% of its workforce while Bell laid off 9% of its workforce.

For Bell, they happily raised dividend payments to their shareholders on top of it all to further taunt the government who was already furious with Bell at the time. Ultimately, Bell got hauled before a House of Commons committee to explain themselves. Bell, for their part, simply treated the hearing as little more than a game as they talked over everyone, ran down everyone’s clock, and refused to answer questions in the process. Their games only further infuriated MPs in the process.

In the process, Bell’s actions managed to pretty much piss everyone off. This included once close allies like the Liberal party and the union representing their employees, Unifor who called Bell’s comments at the committee “outrageous, deceptive and delusional.”

The knock on effect of all of this is that many other media companies were watching all of these proceedings closely. While MPs were unleashing their anger at Bell’s actions, they have also been conspicuously quiet about the CBC who, let’s face it, took similar actions as Bell. It appears that there were some behind the scenes activity going on and, as a result, it almost sounds like a quiet deal was reached. It wouldn’t be unfair to think of it as a deal where the CBC wouldn’t be laying off such a huge chunk of their workforce and, in exchange, the CBC gets another bailout in the process to make up for the money they didn’t quite get out of the Google fund model.

As you know, the CBC was initially supposed to get $33 million from the Google fund model. This amounts to about a third of all the money coming out of Google. Faced with controversy over this decision, the government then capped the amount to $7 million. Obviously, thanks to Meta’s pull out of news links, the CBC wound up experiencing a hit to their traffic growth to their web services. There was always that air of ‘maybe the government has something else in mind for the CBC’.

Now, we know at least part of that end result. In releasing the budget bill, it turns out that the government intends on issuing an additional massive bailout to the CBC. The amount is to the tune of an additional $42 million (which is much higher than the originally earmarked amount of $33 million). The CBC says that thanks to this additional bailout, the 10% layoffs may not be happening after all. From the CBC:

The federal government is upping its funding for the CBC and Radio-Canada, easing the financial strain on the public broadcaster and the need for major job cuts and programming reductions this year.

In the 2024-25 federal budget released Tuesday, an additional $42 million had been allotted for news and entertainment programming — which CBC/Radio-Canada president and CEO Catherine Tait said is “welcome news.”

“This investment, together with the steps we have taken since December, means we will be able to stabilize our operations, preserve jobs, and continue to invest in programs and services,” Tait said in a statement.

Last fall, CBC/Radio-Canada forecast $125 million in financial pressures for the 2024–2025 fiscal year, announcing plans to slash $40 million from its production budget and cut approximately 800 jobs — a 10 per cent reduction of its workforce — including 250 each from CBC and Radio-Canada.

Prior to Tuesday’s budget announcement, CBC/Radio-Canada had already laid off 141 employees and cut 205 vacant positions.

Although CBC/Radio-Canada said in its statement that the one-year budget boost will help the corporation “address its remaining forecast shortfall and balance its budget without significant additional reductions this year,” spokesperson Leon Mar did not confirm if the increase would eliminate the risk of layoffs entirely.

“We will update our financial plans based on the information now available to us,” Mar said in an email.

So, a very different outcome for the CBC in the end compared to Bell.

First of all, it is welcome news that those jobs aren’t going to be lost after all. The massive layoffs has ultimately been a part of the horror show I have been witnessing throughout this whole sorry affair. It’s rare to see good news in any of this, so that is welcome to see.

Having said this, what I’m seeing is very far from a perfect scenario. For one, this also introduces further market distortions in the first place. Bailing out the CBC again only feeds into the argument that the federal government is picking winners and losers in the news market. I mean, if I got $4.2 million (just 10% of that funding), I can guarantee you this operation would explode in expansions overnight. Instead, a small website like mine will now have to fight against that investment and try to survive with meagre scraps that trickle in with Google Adsense and the kind souls willing to support the little guy.

What’s more, there are certainly those out there well within their right to ask why it is that the CBC is getting such special treatment here. By giving further bailouts to the CBC, the government is effectively further insulating the corporation from the market forces of the modern media landscape today. If poor business decisions lead to these now largely cancelled layoffs, then these bailouts are, in a way, rewarding those poor decisions made by management in the first place. To add insult to injury, you just know that those executives are going to be giving themselves massive bonuses on top of it all for “a job well done” on top of it all.

One thing I believe is very certain here is that everything about this was entirely avoidable. If the media companies were giving the straight goods to the government about why they are asking for bailout money in the first place instead of pushing complete nonsense legislation like the Online News Act, a considerable amount of pain in the sector would have been avoided up front. Further, had the media companies actually chosen to work with modern technology instead of ignoring the digital revolution and, ultimately, later fighting against it, we would be talking about how massively vibrant and successful the Canadian media sector has become. Instead, we are witnessing losses, layoffs, and bankruptcies today.

Further, had venture capital not hollowed out the large news companies and loaded them with debt, media companies would have been much more agile and able to make such adaptations more easily in the first place. Instead, it wound up being a case of mindless consolidation while executives simply chose to pillage the financial gains the media sector had achieved from the 80s and sooner, holding on to the firm belief that such successes will just go on indefinitely into the future. Instead, we got news deserts and closures thanks to such business dealings that have made the large media companies a shadow of their former selves.

Now, here we are today with media companies regularly showing up in government hearings, cap in hand, asking for more bailout money so they can continue with business as usual even though business as usual have been costing these companies for years now. As a result, many of these media companies are shedding their independence in exchange for the government being the ones to write the employees paychecks. This combined with the fact that the media companies executives showing little interest in changing these companies for the better. Because of that, there is no reason to believe at this stage that anything will change for the better any time soon.

Drew Wilson on Mastodon, Twitter and Facebook.