March 13, 2009 / 4:44 PM / 10 years ago

CBC may sell some services to cut costs

TORONTO (Reuters) - Canadian Broadcasting Corp may propose to sell radio and television services, consolidate local stations or introduce more U.S.-produced programming under a cost-cutting plan to be presented to its board next week.

Senior CBC executives, led by Chief Executive Hubert Lacroix, will meet on Monday and Tuesday with the public broadcaster’s directors to present their strategy for countering a severe slump in the advertising market, spokesman Jeff Keay said.

The CBC relies on government subsidies as well as advertising sales to meet its budget. Like every other media company, it has struggled with a sharp drop in ad revenues as the recession forces marketers to slash spending.

For the fiscal year ending March 31, the CBC has forecast an ad revenue shortfall of up to C$65 million ($51.2 million). Even so, it thinks it can break even this year. The medium-term outlook, however, is of more concern, CBC has said.

Lacroix told reporters in late February that “all the options are on the table” in terms of trying sell assets and generate revenue to make up for the shortfall.

The CBC, known for internationally popular shows such as “Little Mosque on the Prairie,” hasn’t specified what it could decide to sell.

Meanwhile, using more U.S. TV programming would cut costs, while generating profits that CBC could in turn reinvest in Canadian content.

The CBC would have to balance importing more American shows with its mandate to provide Canadians with distinctly Canadian content.

The CBC has also turned to the government for help, but has insisted it isn’t asking for more money. Instead, it has suggested a line of credit or an advance on funding allotted for future years to deal with the current crisis.

However, the ruling Conservatives have said the broadcaster already receives more than C$1 billion ($787 million) each year from the government and should tighten its belt just like its private-sector competitors.

Aside from government funding, the CBC generates about C$600 million a year in revenue from commercial activities, including C$340 million from advertising.

Lacroix has said the CBC gets less public funding than major public broadcasters in Europe. He has also argued the CBC has no access to the capital markets or to commercial borrowing that its private rivals can tap.

Cost cuts at two private Canadian broadcasters, CTV and Canwest Global Communications Corp, have already resulted in layoffs. CTV has cut 225 jobs since late November, while Canwest has cut 560, including 210 at its broadcasting operations.

Debt-laden Canwest is also looking at selling five conventional TV stations and CTV has announced that it would shut down two Ontario stations.

($1=$1.27 Canadian)

Reporting by Wojtek Dabrowski; editing by Frank McGurty

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