February 25, 2009 / 7:07 PM / in 8 years

Canada says expects broadcaster CBC to cut costs

TORONTO (Reuters) - The Canadian government said on Wednesday it expects the publicly owned Canadian Broadcasting Corp to clamp down on costs as the broadcaster faces a grim outlook and an advertising revenue shortfall of up to C$65 million ($52 million).

"We expect the kind of belt-tightening at the CBC as we see with other broadcasters," Deirdra McCracken, a spokeswoman for Heritage Minister James Moore, said on Wednesday.

"The CBC is already receiving over C$1 billion from taxpayers per year."

McCracken's comments came in response to questions about whether the Conservative government would be willing to give more money to the CBC, after chief executive Hubert Lacroix told staff in a memo that the broadcaster foresees an ad revenue shortfall of up to C$65 million for the fiscal year ending March 31.

"The situation is worse than anyone could have anticipated and is not expected to improve any time soon," Lacroix wrote in the memo sent earlier this week.

"The combination of a severe slump in our commercial revenues, coupled with rising costs of production, is a menacing test that will demand some tough choices on our part," he wrote. "Tough choices that will affect, in one way or another, jobs, services and programs in our corporation."

Despite the projected shortfall, Lacroix said CBC will likely break even for the current fiscal year, adding it is the budget for the year ahead that is the more pressing problem.

McCracken said that Moore, the minister responsible for the CBC, has met with network officials. She did not elaborate on the nature of those discussions.

UNION NOT EXPECTING MORE FUNDING

"We're not holding our breath for any increase in funding this year," said Karen Wirsig, a spokeswoman for the Canadian Media Guild, which represents 5,500 employees at the CBC and its Radio-Canada French-language services.

She said the union has not been notified of pending layoffs.

"We're pretty much at the bone," she said. "Job cuts are going to mean program cuts."

Belt-tightening at other Canadian broadcasters such as CTV and Canwest Global Communications Corp has already resulted in job cuts.

Companies are cutting back the amount of money they spend on marketing because of the current economic crisis, which translates into fewer advertising dollars for the CBC and other broadcasters.

CTV cut 105 jobs in late November, while rival Canwest chopped 560, including 210 at its broadcasting operations.

Canwest is also looking at selling five conventional TV stations and CTV announced on Wednesday that it would shut down two Ontario stations, citing the economic crisis and "the ongoing structural problems facing the conventional television sector in Canada."

Unlike Canwest and CTV, the CBC is funded in large part by taxpayer dollars, which helps guarantee that it can continue to operate despite the plunge in advertising revenues in recent months.

($1=$1.25 Canadian)

Editing by Peter Galloway; editing by Rob Wilson

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