1 Strictly Confidential - CBC Business Plan Update to Staff (October 31, 2008) CBC English Services:...

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Strictly Confidential - CBC Business Plan Update to Staff (October 31, 2008)

CBC English Services: Our GoalCBC English Services: Our Goal

As Canada's public broadcaster, we are successful when we matter to Canadians and Canadians

matter to us

This means that Canadians from across the country and from all walks of life know us, value us, are

actively engaged in our programs and our services, and are participating in the creation of content

We measure this by the quantity and breadth of our audience and the emotional connection Canadians

have with us

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Key Goals for CBC English Services in Key Goals for CBC English Services in 2008-092008-09

The most important goals for English Services in 2008-09 are:

I. Making great contentII. Positioning the Company for the

Future Our people Our platforms

III. Managing our financial situation

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Our Targets for 2008-2009Our Targets for 2008-2009

Radio

• Attain a share of 10.1% for CBC Radio One

• Attain a share of 3.5% for CBC Radio Two

• Attain a Combined Share of 13.6%

Television

• Attain a share of 8.0% in prime time for the regular season

CBC.ca

• Maintain position as the most popular English Language News and Media Site

• Maintain or improve position as the #2 sports destination after TSN and ahead of Sportsnet and The Score

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Major Accomplishments and Notable Major Accomplishments and Notable Events in Q2 and Early Q3Events in Q2 and Early Q3

CBC increased diversity and choice in Canadian music by launching:• the new Radio Two service on Sept. 2, and• four new Radio streams over the internet

CBC enjoyed programming success with:• the 2008 Beijing Olympics, and• the ‘How Do You Solve A Problem Like Maria?’ competition

CBC Television started the season well by achieving a 2+ prime time audience share of 8.4% Season-to-date (Sept. 29 - Oct. 12)

All media provided extensive coverage of the federal election with CBC Television winning the night

The CRTC granted approval for a digital television service licence for Sports programming

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However, the Economic Environment However, the Economic Environment and a Competitive Media Landscape and a Competitive Media Landscape

DominateDominate Traditional TV and Radio platforms operate in a

highly competitive environment Recent economic difficulties have hit advertising

hard, with reduced revenue to broadcasters This recent economic downturn is partly reflected in

media company values In addition, the Federal government is advising that

‘... there's substantial global uncertainty right now, and we have to monitor that and the effects that that has on our revenues and our spending in Canada’ (Finance Minister Jim Flaherty, October 24, 2008)

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Economic Climate – Negative OutlookEconomic Climate – Negative Outlook

Major National Economic Major National Economic IndicatorsIndicators

Canada’s economic growth in 2008 will slow to a third of 2006 and 2007

Total GDP is forecasted to be the lowest in 4 years Consumer Spending (a key driver of advertising spending

activity) is forecasted to be down for a second year in a row

Economic Activity (GDP)

Consumer Spending

Business Spending

Unemployment Rate Inflation (CPI)

2006 3.1% 4.3% 9.9% 6.3% 2.0%2007 2.7% 4.5% 3.5% 6.0% 2.1%2008 0.7% 3.9% 2.5% 6.1% 2.6%2009 0.5% 2.2% 0.0% 6.9% 1.8%

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The Values of Canadian Media The Values of Canadian Media Companies Have Fallen, Especially As Companies Have Fallen, Especially As

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40

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100

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140

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Canadian Media U.S. Media U.S. Newspapers U.S. Music

Source: Stock price history from Finance.Yahoo.com – Oct 2006 to Oct 2008 Industry averages calculated from averages of individual company indices. Canadian (CanWest & Torstar) U.S. Media (CBS, Time Warner, Disney), U.S. Newspaper (Gannett, New York Times. Washington Post, Tribune), Music (Sony, Warner Music, Apple)

Canadian

Industry Averages

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The Commitment to our Business The Commitment to our Business PlanPlan

In this difficult environment, we remain fully committed to the Business Plan

presented to you at the start of the year

The following is an update of our performance

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RadioRadio

Plan UpdateThe Ongoing Renewal of Radio One

17 new shows introduced in the summer schedule

‘Q’ redeveloped and moved to morning timeslot

New national current affairs show in the afternoon

Local show redevelopment underway in Edmonton, Regina, Winnipeg & Ottawa

The Repositioning of Radio Two

September launch of the final phase of redevelopment

Diversity (of all kinds) has been dramatically increased

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RadioRadio

Plan UpdateThe Creation of New Platform Opportunities

Four new 24/7 online music streams launched:

• Classical• Jazz• Canadian Songwriting• Canadian contemporary classical

Composition Integrated CBC Music and Book

Portal in development

The Extension of Local Service

Concluded a study of ways to deliver local service in underserved communities

Pilot project targeted for late spring/early summer

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The Entertainment OfferThe Entertainment Offer

Plan UpdateContinue to strengthen our Entertainment properties Summer: Establish a clear ‘repeat season’ during which viewers will have a ‘second chance’ to see titles

Series returning to CBC Television in Fall 2008, such as Little Mosque, Heartland, and The Tudors, were repeated during the summer to increase interest

Success was had with scheduling shorter run series /movies prior to the U.S. television launch:• Celine (2+ audience of 761,000)• The Flood (2+ audience of 834,000)• TTN: Canada, eh? (2+ aud. of

911,000) How To Solve a Problem Like

Maria? performances averaged 574,000 during the summer with 671,000 for the finale

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The Entertainment OfferThe Entertainment Offer

Plan Update Fall: Concentrate on proven series as well as shorter-run series, specials and movies

Launched Jeopardy & Wheel of Fortune to strengthen lead in times for the supper hour news and our prime schedule

Welcomed or Welcoming back many returning series and programs (continues into Q3)

Winter: The ‘premiere’ season for Canadian entertainment programming

Launching 2 new Canadian series in January, 2008:

• Wild Roses• Being Erica

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The CentresThe Centres

Plan Update The process of decentralization needs to increase with further authority being transferred out of Toronto with respect to:

• Communications

• Revenue, and• Show making

Communications:• Jennifer Gillivan appointed

Director, Partnerships & Communications, Centres

• Successful launch of daily episodic promos for local news

• Communications and Partnerships staff in Centres focus on building success of local programs, reporting jointly to Managing Directors and Jennifer Gillivan

Revenue:• Working group established to

identify local revenue opportunities

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The CentresThe Centres

Plan Update The process of decentralization needs to increase with further authority being transferred out of Toronto with respect to:

• Communications

• Revenue, and• Show making

Show Making - Television:• Local news programs continue to

develop and grow audience• 9 Local ‘Living’ programs began

their third season• Variety of local specials broadcast• Regional Program Development

Fund released October 2008• ‘Citychase’ summer series was

produced with a new business partnership model

Show Making - Radio:• Local programming continues to

develop and hold or grow audiences

• Many network programs, ongoing and new, are being produced in Centres

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NewsNews

Plan Update Redefining the CBC News brand: aligning all news streams Reorganizing and integrating resources Renewing and repositioning flagship Radio and TV programs Applying market-driven strategies for development of local news programs and our newsgathering capacity

Research and high-level changes to programming will be rolled out to News staff late fall

These projects are ‘on-going’ and will have been advanced to a greater extent over the next few months

Therefore, we will have a more detailed update on these initiatives for you in our Q3 Business Plan update

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SportsSports

Plan UpdateStrengthening of margins, particularly for professional sports properties

Concentrating on Hockey: Continued improvements in the

overall telecast Updated the set: increased studio

presence Promoted Hughson/Simpson to be

the lead Play-by-play team Added Mike Milbury as a studio

personality Added Marc Crawford to the team Renewed PJ Stock’s contract Introduced the new opening theme

and song

The Hockey Challenge

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SportsSports

Plan Update The Soccer Opportunity We will have a more detailed

update on these initiatives in our Q3 Business Plan update Growing other

sports properties

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Human ResourcesHuman Resources

Plan UpdateCBC English Services will focus on ensuring:

Direct & Frequent Communication with employees

Business Plan and Objectives have been cascaded to our employees and our unions (through live presentations, podcasts and other posted materials)

Quarterly updates have been presented regularly since that time

Performance Management (PMSD)

94.9% of English Services employees have set objectives with their supervisor

A new Talent Management System will be launched in January, 2009, to facilitate the Performance Management process, as well as Learning Management and Succession Planning

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Human ResourcesHuman Resources

Plan Update Training/Talent Management

76 front-line supervisors in English Services will have participated in the ‘Ready to Lead’ Development Program by fiscal year’s end

301 sessions of Respect in the Workplace have been held with over 4,400 employees have participated

Positive Employee and Labour Relations

CBC and CMG have met for four full weeks since June with the mutual goal achieving a new collective agreement in December 2008

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Digital Programming & Business Dev.Digital Programming & Business Dev.

Plan UpdateFour Key Pillars to our strategy of Improving Our

Platform Infrastructure and Grow New Platforms:

More specialty channels

To build a critical mass of channels, we continue to seek out new opportunities and bring business cases to the CBC/Radio-Canada Board of Directors when appropriate

Better performance for the web site

We substantively improved ‘Web 2.0’ features and its uptake, with more than 130,000 registered members to date and more than 173,000 comments submitted in Sept. 2008

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Digital Programming & Business Dev.Digital Programming & Business Dev.

Plan Update More vertical on-line only channels

We are championing Online-Only Channels

• 4 new Radio channels launched Sept., 2008, with more to come

Profitable syndication and on-demand deals

We are pursuing revenue generating deals

• Recent deals include Bell Olympics, Joost, MySpace, Cogeco, and others

• New mobile platform launched with partners Quattro Mobile, RIM, and Lipso

• Widget strategy launched in partnership with Clearspring

• News Ticker under development with eMarket Software

• CBC programs made available on iTunes

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23

Strictly Confidential - CBC Management briefing (October 31, 2008)

Sales: What We Said in May 2008Sales: What We Said in May 2008

The market will be a challenge due to an uncertain economic outlook

TSX 36%

CDN$ 16%Since May

Economic Crisis

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24How Does the Economic Crisis Impact How Does the Economic Crisis Impact

TV Ad spending?TV Ad spending?TV ad spend

1st half of ’08 vs. ‘07

TV ad spend 1st half of ’08 vs.

‘07

-6% -42%

-6% -23%

-37% -70%

-18% +25%

+23% TOTAL FINANCIAL

-32%

TOTAL AUTOMOTIVE

-8%

Source: Nielsen Ad Expenditures – Jan-Jun 2008 vs. Jan-Jun 2007

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25How Does the Economic Crisis Impact How Does the Economic Crisis Impact

TV Ad spending?TV Ad spending?TV ad spend

1st half of ’08 vs. ‘07


‘07

-18% -7%

-20% -19%

-8% -14%

-4% -31%

-5% -100%

-8% -3%

-9% -6%Source: Nielsen Ad Expenditures – Jan-Jun 2008 vs. Jan-Jun

2007

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26However, Some Advertisers are However, Some Advertisers are increasing TV Spending during the increasing TV Spending during the

DownturnDownturnTV ad spend

1st half of ’08 vs. ’07


‘07

+71% +22%

+87% +25%

+6% +138%

+4% +14%

+20% +5%

Source: Nielsen Ad Expenditures – Jan-Jun 2008 vs. Jan-Jun 2007

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First Half Results vs. the IndustryFirst Half Results vs. the Industry

While overall TV ad revenues are predicted to grow by 1.8% in 2008 vs. 2007*, our

First Half revenues have increased

+8% year-over-year(on ‘same store’ basis, adjusted for changes in programming)

While we have work to do, we are While we have work to do, we are weathering the storm better than the weathering the storm better than the

industryindustry* Source: TD Newcrest – The Outlook for Canadian Advertising – Sept. 3,

20 08

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Review of our Sales Strategies to Review of our Sales Strategies to Deal with the Downturn Deal with the Downturn

Focus on new long-term HNIC partner selling• Long-term deals +7%• Rate per 30-sec ad +12%• Total Long term deal HNIC revenue +6%

Leverage our Canadian Content point-of-difference4 big wins:• Hockeyville• Mitsubishi City Chase• Cisco Million Acts of Green• Dove Finding Body & Soul

Accelerate non-traditional sales• Building blocks put in place• Recent hire of Director, Digital Sales• Pushing hard on titling and features

Bring Engagement model to market

Soft market has distracted everyone, inhibiting our ability to garner the premiumsImplement new Sales structure strategies• Transform from being sales reps to being ‘business partners’ Create category ‘experts’ Create 3 customer tiers: - Premium/Strategic/Traditional• Shift to more strategic selling

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Financial Strategy:Financial Strategy:Contingency Plan UpdateContingency Plan Update

In Q1 we implemented a contingency plan to manage the decline in revenues without compromising our strategies and priorities

Contingency plan consists of • deferring costs and not cutting costs• revised sales structure to prepare for a changing

media environment• revised sales strategies to preserve/regain

revenues The contingency plan is on track

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Financial Strategy: The ShortfallFinancial Strategy: The Shortfall

Forecast Deficit as at Q1 Q2

Deferral to Schedule 7.0 7.0 Release of Reserves 16.5 16.5 Departmental and Promo deferrals 5.0 5.0 Hiring deferrals 2.0 2.0 Incremental revenue 1.5 1.5 Other 6.0 6.0 Amount to find - 7.0

38.0 45.0

(millions)

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