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CBC television ad revenue dropped 16% in first half of 2023 as mainstream media flounders

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6 minute read

From LifeSiteNews

By Clare Marie Merkowsky

The news comes just weeks after the CBC announced it must lay off about 600 workers, approximately 10 percent of its staff, as it faces a $125 million budget shortfall.

The Canadian Broadcasting Corporation (CBC) television ad revenues plummeted by 16 percent in the first half of this year, a further indication that mainstream media is struggling to keep pace in the independent era.

According to information obtained December 19 by Blacklock’s Reporter, CBC, Canada’s public radio and television broadcaster, published their Second Quarter Financial Report which revealed that television ad revenues decreased from $95.7 million to $80.6 million in the first six months of 2023.

“There is much to do to prepare CBC for an uncertain future,” President and CEO Catherine Tait said. “We are experiencing the same challenges as other media in Canada and around the world.” 

The news comes after Tait failed to mention the reduced ad revenues at the November 2 Commons heritage committee. It is also just weeks after the CBC announced that it must lay off about 600 workers, approximately 10 percent of its staff, as it faces a $125 million budget shortfall.  

According to the report, from the beginning of the year until September 30, the CBC lost 16 percent of its television ad revenues for both English and French programming. The report further states that it does not expect a recovery from the loss for years. 

“In response to the federal Budget 2023 announcement to reduce spending by three percent and in light of both the softening of the TV advertising market and the current economic environment we are developing an analysis of the revised financial context that presents an updated version of our financial pressures including the adverse revenue outlook for the next three years,” it said.  

“We occupy an important place in the Canadian broadcasting system and face a unique set of risks,” the report stated. “Like all broadcasters we must adapt to accelerated technological changes, shifts in demographics, evolving consumer demands, increasing regulatory scrutiny and structural changes in the media ecosystem.” 

Despite its revenue “tracking below target,” the CBC receives major funding from the Liberal government under the leadership of Prime Minister Justin Trudeau. The government subsidies make up CBC’s largest single source of income, a fact that has become a point of contention among taxpayers who see the propping up of the outlet as unnecessary.

On November 2, Tait claimed that the CBC requires further government funding, saying “To be clear over the last 30 years CBC has not had a real increase in its budget, real dollars aside.” 

Tait’s comment seems unfounded considering the CBC was set to receive increased funding as a result of mandated deals signed with Big Tech under Trudeau’s Online News Act.  

The deal was finalized in early December. Under the new agreement, Google will pay legacy media outlets $100 million to publish links to their content on both the Google search engine and YouTube. 

As a result of the recent subsidies and the Google agreement, roughly half the salary of a journalist earning $85,000 is estimated to be paid by the combined contributions of the Trudeau government and Google. 

Furthermore, Trudeau recently announced increased payouts for legacy media outlets ahead of the 2025 election. The subsidies are expected to cost taxpayers $129 million over the next five years. 

Beginning in 2019, Parliament changed the Income Tax Act to give yearly rebates of 25 percent  for each news employee in cabinet-approved media outlets earning up to $55,000 a year, to a maximum of $13,750. 

However, the Canadian Heritage Department has since admitted that the payouts are not sufficient to keep legacy media outlets running. Accordingly, the Trudeau government doubled the rebates to a maximum of $29,750 annually, up to 35 percent of a journalist’s salary. 

Furthermore, despite being nominally unaffiliated with either political party in Canada, the CBC receives massive funding from the Trudeau government. According to its 2020-2021 annual report, the CBC takes in about $1.24 billion in public funding every year, which is roughly 70 percent of its operating budget. 

However, the massive payouts are apparently insufficient to keep CBC afloat amid growing distrust in mainstream media. 

According to a recent study by Canada’s Public Health Agency, less than a third of Canadians displayed “high trust” in the federal government, with “large media organizations” as well as celebrities getting even lower scores. 

Large mainstream media outlets and “journalists” working for them scored a “high trust” rating of only 18 percent. This was followed by only 12 percent of people saying they trusted “ordinary people,” with celebrities receiving only an eight percent “trust” rating. 

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Business

Broken ‘equalization’ program bad for all provinces

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From the Fraser Institute

By Alex Whalen  and Tegan Hill

Back in the summer at a meeting in Halifax, several provincial premiers discussed a lawsuit meant to force the federal government to make changes to Canada’s equalization program. The suit—filed by Newfoundland and Labrador and backed by British Columbia, Saskatchewan and Alberta—effectively argues that the current formula isn’t fair. But while the question of “fairness” can be subjective, its clear the equalization program is broken.

In theory, the program equalizes the ability of provinces to deliver reasonably comparable services at a reasonably comparable level of taxation. Any province’s ability to pay is based on its “fiscal capacity”—that is, its ability to raise revenue.

This year, equalization payments will total a projected $25.3 billion with all provinces except B.C., Alberta and Saskatchewan to receive some money. Whether due to higher incomes, higher employment or other factors, these three provinces have a greater ability to collect government revenue so they will not receive equalization.

However, contrary to the intent of the program, as recently as 2021, equalization program costs increased despite a decline in the fiscal capacity of oil-producing provinces such as Alberta, Saskatchewan, and Newfoundland and Labrador. In other words, the fiscal capacity gap among provinces was shrinking, yet recipient provinces still received a larger equalization payment.

Why? Because a “fixed-growth rule,” introduced by the Harper government in 2009, ensures that payments grow roughly in line with the economy—even if the gap between richer and poorer provinces shrinks. The result? Total equalization payments (before adjusting for inflation) increased by 19 per cent between 2015/16 and 2020/21 despite the gap in fiscal capacities between provinces shrinking during this time.

Moreover, the structure of the equalization program is also causing problems, even for recipient provinces, because it generates strong disincentives to natural resource development and the resulting economic growth because the program “claws back” equalization dollars when provinces raise revenue from natural resource development. Despite some changes to reduce this problem, one study estimated that a recipient province wishing to increase its natural resource revenues by a modest 10 per cent could face up to a 97 per cent claw back in equalization payments.

Put simply, provinces that generally do not receive equalization such as Alberta, B.C. and Saskatchewan have been punished for developing their resources, whereas recipient provinces such as Quebec and in the Maritimes have been rewarded for not developing theirs.

Finally, the current program design also encourages recipient provinces to maintain high personal and business income tax rates. While higher tax rates can reduce the incentive to work, invest and be productive, they also raise the national standard average tax rate, which is used in the equalization allocation formula. Therefore, provinces are incentivized to maintain high and economically damaging tax rates to maximize equalization payments.

Unless premiers push for reforms that will improve economic incentives and contain program costs, all provinces—recipient and non-recipient—will suffer the consequences.

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

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From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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