Friday, March 13, 2009

The Future of the CBC

As our national broadcaster, the Canadian Broadcasting Corporation strives to offer original programming in both French and English but, when it comes to accepting taxpayers’ money, the CBC cannot say “no” in either official language. Each year, the enterprise receives over one billion dollars from the federal government. Now that difficult economic times have encompassed even the so-called “Mother Corp.,” the CBC has asked for an additional $60 million to make up an advertising revenue shortfall. Thus far, these requests have been rebuffed, but present circumstances occasion a reassessment of the status quo.

For all the things that make up the CBC – radio, Internet, other properties – it is the television component that is most problematic, in terms of cost and content. Therein lays the quandary – should taxpayers be financing this one broadcaster, even as it competes with private networks like Global and CTV?

As it accepts public funding, does the CBC offer content that could not be provided by private entities and, if so, does that content reflect the Canadian mainstream, or the worldview of the oligarchy that runs the network? Much has been made of the left-leaning nature of the CBC’s news coverage. As I wrote last year, “this is the network that marked the fifth anniversary of 9/11 with a special investigation into whether the terrorist attacks were an inside job by the U.S. government (CBC gave ‘both sides’ of the story – note to our national broadcaster: both sides of bollocks is still bollocks).” But liberal media bias is not peculiar to public news outlets, or even to Canada. What sets the CBC apart is the nature and funding of its other TV programming, including comedy and drama.

Experienced viewers of television in this country can detect the bacon-y scent of Canadian production values almost at once. Sets and lighting are odd, wardrobes appear to have been selected in pitch darkness, and casts are made up of the same handful of actors who – when they are not manning picket lines to demand yet more handouts and guaranteed airtime – are mugging unmercifully on the taxpayers' dime. Bad television may not be a crime, but why should innocent folks have to pay for it?

Why, for example, should taxpayers foot the bill for CBC's Little Mosque on the Prairie, an unwatchable politically correct harangue? Adding insult to injury, when 3.7 million people saw the debut episode of this monstrosity – presumably because they had passed out or were trapped under something heavy, rendering them unable to change channels – the aberration got banner reportage throughout the CBC’s 2006-7 Annual Report. That is, just over ten percent of the country tuned in to a production for which one hundred percent of the country was obliged to pay, and this success rate was sufficiently anomalous to be trumpeted to the skies.

In its 2007-8 Annual Report, the CBC acknowledges that Canadian television production is not profitable and avers that private broadcasters receive more money in tax concessions and “other indirect government support” than CBC Television receives in government funding. For the sake of argument, let’s say that’s true. Would this not suggest that the private broadcaster model is a better one? If CBC Television is so hell-bent on producing shows that are “distinctly Canadian” (a phrase repeated so often in CBC publications that it cries out for a drinking game), then wouldn’t this task be made easier by opting for the more lucrative, tax-advantaged route of its private sector competitors, rather than consuming over a billion dollars in direct subsidies every year?

The CBC contends that 80 percent of its television programming consists of Canadian content – notwithstanding the network’s ubiquitous imports like The Simpsons, Coronation Street, Wheel of Fortune, Jeopardy! and myriad American movies – but this misses the point. If there is a need and appetite for the Canadian television the CBC provides, then it should be able to find viewers and private sponsors. If, however, there is an insufficient audience for their product, then the CBC is simply indulging in sanctimony at taxpayers’ expense.

At a time when economic turmoil is forcing governments and individual citizens to make cutbacks, cringe-inducing television is a good place to start. Moreover, if a private model provides greater funding for production, as the CBC suggests, perhaps a change would be in everyone’s interest. There is a place for public broadcasting, but in its current form – accepting billions of taxpayer dollars while bidding against private counterparts for U.S. programming and major events like the Olympics – the CBC does not fill it.

By all means, if the network wishes to take on a truly public role, it would be serving a need. Otherwise, the CBC should let us keep our billion bucks and compete for programming, audiences and advertising dollars as private networks are compelled to do.

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in Canada and the United States.

Thursday, March 5, 2009

It's Not About You

“It’s not about you.”

These are the opening words of the Rev. Rick Warren’s best-selling book, “The Purpose Driven Life,” and the sentiment may be comforting to everyone affected by this unhappy economy.

To wit, we are all in this together. As much as folks who have lost their jobs or seen their incomes and retirement funds shrink may feel alone in the storm, in fact every one of us is touched in some way.

Of course, this is somewhat distinct from Warren’s intention of the words – he advocates a life of service to others with a higher meaning in mind – but the interconnected nature of our travails is worth a look.

In Canada, manufacturers and exporters were having a difficult time even before the current downturn began, owing in part to an inflated currency that made our goods more expensive. But now that our international trading partners, including and especially the United States, find themselves in financial turmoil and unable to buy what we are selling, times get even tougher. This translates to share price declines and massive job losses – 129,000 in January 2009 alone – which means that whether you are an investor, a worker, or both, you got hit.

On Parliament Hill, opposition parties have pledged to force an election if Prime Minister Stephen Harper and Finance Minister Jim Flaherty do not turn around the country’s economic fortunes by June. This is Olympic-calibre silliness. One hopes, certainly, that Canada’s economy rebounds in the next three months, but many of the factors affecting that outcome are beyond the powers of any Prime Minister or his cabinet. International trade and the global nature of our economy dictate that recovery or recession depend in large measure on the health of our trading partners. If other countries do not have the demand for our commodities and manufactured exports, the rest is just so much chin music.

As for the United States, the markets have rendered their verdict on the high tax, spending and borrowing prescriptions of a new president and Congress, and it is not good. Indeed, the Dow Jones Industrial Average shed 20% of its value in the six weeks after Barack Obama became Commander-in-Chief and began to re-centralize the American economy.

Markets don't take things personally. The market has no politics, per se. What you see in the Dow and other indices is an objective assessment government policy and where it could lead. This is distinct from a poll or a vote in that investors’ assets are at stake, not their ideas. Opinions on abortion or government-funded television do not steer the markets; that is the task of steely-eyed pecuniary interest. So when a president announces higher taxes and unprecedented borrowing, market downturns occur as night follows day.

The good news is that this can be remedied, and whether you are in government, invested in the markets, or just working day-to-day, there are reasons for hope and steps you can take.

For example, companies that emerge from this period intact will be leaner and healthier than they were before this started. Bad news and cutbacks are announced and effected during such times, so when companies start to generate income again, it goes straight to the bottom line.

The task for investors, then, is to find the best companies in the best industries and buy with discipline and careful planning. For managers and workers, be brave and alert, ready and willing to adapt to new realities, in the form of concessions and improvements. Lastly, if you are in government, by all means spend and regulate where you must in order to get us out of this fix in the short-term, but then get out of the way and let people’s innovation and initiative lead on. One hopes that somewhere in this list of prescriptions, readers will recognize themselves.

It may seem like cold comfort to be reminded that the global downturn is not something that is happening to you, personally, but it is nonetheless true. More important, bleak as things may seem and despite the blame-laying on all sides, bear in mind that we as a society, a system, and a family of nations will get out of this mess the same way we got into it – together.

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.