https://www.thestar.com/business/2022/09/09/a-cut-too-far-lisa-laflammes-ouster-was-just-the-latest-in-a-long-string-of-departures-from-bell-media-the-cost-cutting-worked-well-until-it-didnt.html

Five days into his job as president of Bell Media, Wade Oosterman cleaned house.

In a January 2021 memo to staff, the 59-year-old executive and four-decade veteran of the telecommunications industry announced the departures of several Bell Media executives, including the heads of original programming, Bell Media Studios, and content sales and distribution.

“To continue to lead in a transforming industry, our operational structure needs to make doing business with us easier while also enabling necessary investment in the exciting new content and technology innovation opportunities ahead,” Oosterman told his staff.

The memo was coded in corporate speak, but the company’s financial statements painted a clearer picture: Bell Media, a subsidiary of BCE Inc. which owns popular news channels like CTV News, CP24 and BNN Bloomberg, was losing money. With advertisers cutting their spending amid the COVID-19 pandemic, the subsidiary reported an annual revenue decline of 14.5 per cent in 2020 — or a loss of $467 million — from the same period the year before. Since the start of the global health crisis, in March 2020, BCE Inc.’s stock price had tumbled 14 per cent.

In the weeks and months after Oosterman took office, Bell Media axed hundreds of workers in rapid succession — long-time employees and senior managers alike. Several former staff who spoke with the Star remember being called into abrupt virtual meetings where, in the span of roughly 90 seconds, they were fired en masse without much explanation.

That kind of downsizing has, over the past year and a half, significantly reduced salary and payroll expenses for Bell Media, a move that will likely amass savings and boost revenue in the long term. But to an extent not quite seen before at the media division, it has also provoked an internal staffing crisis and an external optics nightmare that could threaten the news company’s brand.

According to multiple sources close to Bell Media, the recent ousting of CTV News anchor Lisa LaFlamme, one of Bell’s most popular and accomplished journalists, is the latest example of Bell executives’ “obsession with head counts,” an unrelenting focus on how many staff work in the media division, how much money they make, and how to shrink those numbers fast.

(Bell Media did not respond to the Star’s requests for comment by press time.)

Now, after fearsome public backlash over LaFlamme’s departure, Bell executives have been forced to reckon with their own business model.

“They’ve long thought that they could offer quality and competitive products with fewer people,” said Mark Sikstrom, a former head of CTV News Channel who now works as a media consultant.

“But it’s a dangerous game to play. How much can they cut before it starts hurting their business?”

‘The penny dropped at the Olympics’

For the executives at BCE Inc., the prospect of owning a television network as ubiquitous as CTV was so nice that, in just over a decade, they bought it twice.

The first purchase came in 2000, when then-Bell CEO Jean Monty bought the network for $2.3 billion to draw advertising revenue and drive cable subscriptions. But, a few years later, after a series of diminishing returns, Monty’s successor, Michael Sabia, sold off chunks of the network to focus instead on the company’s more lucrative business: telephone and internet services.

Still, the allure of media ownership was hard to ignore. The mid-to-late aughts marked the beginning of television on the internet; upstart streaming services like Netflix and Hulu and tv.com, most of them owned by American media conglomerates, offered customers an easier way to consume movies, TV shows and news. At the same time, telecom companies viewed ownership over sports and media content as a way to generate cash flow while they invested heavily in their internet and wireless networks.

Then-Bell CEO George Cope — Sabia’s successor and, at six-foot-seven, a literal and figurative titan of the telecom world — wanted to capitalize on the moment. In 2010, not long after Shaw Communications bought Global TV for $2 billion, he sought to reacquire CTV in its entirety for $1.3 billion. In subsequent interviews, Cope said he made the decision while watching live clips of the Vancouver Winter Olympics on his smartphone — a novel concept.

“The penny dropped at the Olympics,” he told financial analysts at the time.

While the deal gave Bell national distribution rights over a litany of crowd-pleasing shows like “Grey’s Anatomy” and “The Big Bang Theory,” and must-watch sporting events like the NFL Super Bowl, it also handed Bell the tricky business of news broadcasting.

Even before Netflix and Amazon Prime went mainstream, television broadcasters were struggling to maintain profits. Advertising dollars were in steep decline, and the number of Canadians watching the evening news was shrinking on an annual basis. The rise of social media and streaming services throughout the 2010s only accelerated an already-existent shift from the traditional mode of consumption.

Within months of Bell’s purchase of CTV, the company’s executives were flipping through an unflattering balance sheet. In 2013, the television network lost $15 million before taxes. Two years later, amidst a bitter feud between BCE Inc. and Canada’s national TV regulator, a scandal broke out in the CTV newsroom.

Determined to turn a profit in the struggling media division, the executives sent in some of their own people to shake things up.

‘Cope’s right-hand man’

Long before he took over at Bell Media, Oosterman played high school basketball with Cope — his close friend and, eventually, his boss. As teenagers, they spent summer nights at the cottage with a young Jim Balsillie of future BlackBerry fame. After graduating from the University of Western Ontario’s Ivey Business School in the 1980s, they became pioneers of Canada’s nascent wireless communications business.

In their early 20s, Cope and Oosterman co-founded Clearnet Communications Inc., a company that bought two-way radio networks used mostly by taxi and bus services. They figured, quite presciently, that the technology would soon become the primary tool for cellular phones. When Telus Communications Inc. bought Clearnet for $6.6 billion in 2000, the businessmen accepted swanky new jobs in Telus’ C-suite.

Cope was a rising star in the telecoms business. He was the head of Telus Mobility before being named Bell CEO in 2005, a tenure that spanned the launch of the Bell Let’s Talk Initiative and a tripling of company profits. Meanwhile, Oosterman, who followed Cope to Bell in 2006, worked quietly in marketing for wireless services as president of Bell Mobility and chief brand officer.

“Oosterman really isn’t a media guy,” said Sikstrom.

“He’s a smart guy, for sure, but he was always more on the wireless side of the business — Cope’s right-hand man. He didn’t come (to Bell Media) equipped with an understanding of how the entertainment and news business works.”

Nonetheless, in 2015, when then-Bell Media president Kevin Crull was caught meddling with CTV’s news coverage, Oosterman was sent to oversee the media division.

The Crull revelations, first reported by the Globe and Mail, sparked intense public backlash. The president, a figure theoretically detached from CTV’s day-to-day editorial operations, had reportedly ordered journalists not to air clips of Jean-Pierre Blais, then-chairman of Canada’s television regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), because of BCE Inc.’s ongoing feud with the regulator over its telecom laws. According to the Globe’s reporting, top editors at CTV feared their jobs would be in jeopardy if they didn’t comply with Crull’s direction.

Cope quickly shuffled Bell’s executive ranks. Within weeks, Crull was ousted from the company. Mary Ann Turcke, an engineer by training and Bell’s head of field operations, was tapped to replace him. Without the same operational independence afforded to Crull, Turcke was instructed to report directly to Oosterman, who Cope promoted to group president of Bell Canada and BCE.

The move was designed to quiet the noise at Bell Media. Under Oosterman’s supervision, Bell Mobility had produced strong results without much turbulence. Whatever tactics worked in the wireless division could be applied in the media division, too, the company’s executives reckoned.

But the Crull scandal would not be the last at Bell Media. Sources close to the media division argue that the strategy adopted by Bell Media’s new leaders laid the groundwork for more trouble later on.

“From a business standpoint, you might think, ‘Why can’t we just operate Bell Media the same way we operate Bell Mobility?’” one former manager at the company told the Star. “Well, now we know why.”

‘We’re bleeding staff’

In telecoms, as in most major businesses, corporate restructuring is common practice.

Every few years, company leaders dive deep into the day-to-day operations of their departments to find redundancies and cut costs. They trim payroll, consolidate positions and, come earnings season, report higher revenues and profit margins to shareholders. It’s an exercise that keeps big companies nimble and attractive to investors, but it often comes at the expense of workers.

The layoffs at Bell Media mimicked an approach that former company officials say is familiar at BCE Inc.

Soon after Oosterman took over at Bell Media in January 2021, he enacted a restructuring campaign that axed hundreds of jobs in newsrooms and radio stations while multiplying the workloads of many.

Per the officials, who asked to not be named, the company ranks most staff on a numerical hierarchy based on their title and salary and cuts their jobs accordingly. The ranking starts at “CP1,” which represents the lowest tier of staff, and on to CP2, CP3, CP4, most of whom are general managers and directors. The highest number in the hierarchy represents Mirko Bibic, Bell’s CEO. (The sources who spoke with the Star did not know what ‘CP’ stands for.)

“The way the cuts at Bell Media work is they start with the higher numbers and then trickle down,” said one former manager familiar with the process.

“They cut the CP5s, and then the CP4s, and then the CP3s, CP2s and CP1s.”

Even before Oosterman took office, former managers at Bell Media recalled higher-ranking officials routinely asking them to make cuts.

“Directors would often come to our division and say, ‘OK, you have to lose, like, three CP4s, three CP3s and eight CP2s,’” said one former manager.

Early in January 2021, Oosterman abruptly cut seven presidents and vice-presidents at Bell Media. A few weeks later, several executive producers and general managers were shown the door. And by the end of the month, the company had axed the lowest rung: radio hosts, editors, digital producers and reporters, all in a couple of days.

In a memo to staff in February 2021, Oosterman acknowledged the departures were “unfortunate,” but a “reflection of the change necessary for Bell Media to prevail in a transforming sector that has also been uniquely impacted by COVID-19.”

For investors, Oosterman’s choices paid off. By the end of 2021, Bell Media’s results exceeded the company’s financial goals. Revenue grew by 10.4 per cent to $3.04-billion year-over-year, ending a revenue decline exacerbated by the COVID-19 pandemic. The media division’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) — a key indicator of financial success — rose 4.3 per cent to $725 million. Meanwhile, thanks to Bell Media’s focus on streaming services like Crave, subscriber revenue increased 4.8 per cent in 2021 while overall subscriptions to Crave grew by 200,000.

But staff at Bell Media say the cuts threw the company’s newsrooms into disarray. So many key employees and managers lost work that the stations were having difficulty retaining institutional knowledge.

“There’s so much turnover that it’s hard to develop any kind of long-term strategic vision,” one source close to the company told the Star.

While the workforce shrunk, the company kept producing the same volume of content. “There are constant cuts, but the same content is delivered. That just means more people have more weight and more responsibility on their shoulders. How long can you sustain that?” the source said.

At an internal town hall in August, employees at CTV confronted their bosses. “Morale in the newsroom has been horrible for months. We’ve been bleeding staff. I can name at least a dozen people who’ve left. If this is a company so keen on promoting mental health, why is no one checking on the mental health of its own staff?” one employee asked.

According to former managers in Bell Media, many of the company’s decision-makers have long governed with the belief that their most popular brands — channels like CTV News, CP24, BNN Bloomberg — are of greater importance to the company than the personalities on TV or radio. Several former anchors at Bell Media news stations described instances where senior managers, including CTV vice-president of news Michael Melling, who reportedly ousted long-time CTV anchor LaFlamme, told them they were “replaceable.”

“Bell knows that every broadcast journalism student wants to be on TV, and that there are tons of broadcast schools in the GTA churning out graduates every year,” said a former manager at Bell Media.

“If your weather reporter doesn’t want to do the job for less than $80,000, Bell can get a (Toronto Metropolitan University) grad to do it for $50,000 instead.”

For years, the company had laid off senior staff and high-profile figures with little trouble. Most managers, many of whom have nondisclosure agreements in their contracts, left without a public fuss. Mass cuts at Bell Media could reliably blend in with the deluge of downsizing that has so typically dogged the news industry.

In August, though, it was a single TV personality — and the transformative force of social media that, over two decades, have dramatically weakened broadcasting — whose departure swiftly plunged BCE Inc. into a public relations crisis.

“I was informed that Bell Media made a ‘business decision’ to end my contract, bringing to a sudden close my long career with CTV News,” said LaFlamme, in a two-minute-15-second homemade video, which she recorded on a phone and posted to Twitter, where she has more than 133,000 followers.

“I was blindsided, and I’m still shocked and saddened by Bell Media’s decision.”

LaFlamme’s video scored more than 4.6 million views, vastly outperforming the viewership of CTV News’ evening news segment.

The moment underscored a shift in the balance of power.

“CTV as a brand is bigger than any one personality. But the personalities become the torchbearers of the brand, with platforms of their own that exist outside the company,” said Sikstrom.

Jacob Lorinc is a Toronto-based reporter covering business for the Star. Reach him via email: jlorinc@thestar.ca