Demise
In 1928, the Liberal government of William Lyon Mackenzie King commissioned a Royal Commission on Broadcasting (the Aird Commission) to study the future of radio in Canada. The Aird Commission issued its report in late 1929 calling for the creation of a public broadcasting system in Canada along the lines of the British Broadcasting Corporation and other national broadcasters around the world in order to prevent U.S. domination of Canadian airwaves and to promote national objectives. To this end, the report called for the creation of a Canadian Radio Broadcasting Company which would build high powered radio stations across the country as part of a public radio network.
Meanwhile, CNR's radio network was a target of its commercial rival, the privately owned Canadian Pacific Railway. CNR Radio was a commercial venture with the primary purpose of attracting riders to the CNR by offering them entertainment as well as, beginning in 1929, providing direct revenue to its parent by selling advertising. The CPR complained intently that by allowing government-owned Canadian National to operate a radio network, particularly one that sold advertising, the government was allowing CNR to engage in unfair competition. In 1930, the CPR began construction of its own radio network — CPR Radio — but due to financial difficulties during the Great Depression it was closed in 1935.
The 1930 federal election resulted in the defeat of the Mackenzie King government and the assumption of power by a Conservative government led by R.B. Bennett who, as a corporate lawyer who had had the Canadian Pacific Railway as one of his clients, proved sympathetic to its arguments and opposed any government competition with the CPR and was determined to strip the CNR of its radio network. A group of Conservative Members of Parliament successfully pressured Thornton, the radio network's principal champion, to resign as president of CNR in 1932 - he was also stripped of his pension.
In November 1931, as a result of intense pressure from the Railway Committee of the Canadian House of Commons, the CNR ended its on-train radio reception service. The Canadian Radio League lobbied heavily for the implementation of the Aird Commission report creating a public broadcasting system under the aegis of a new government agency, and in 1932 the Bennett government agreed to set up the CRBC. In early 1933, the CNR sold its radio stations and studios to the CRBC for $50,000; many of the CNR's radio staff went to the CRBC as well. In turn, the CRBC's facilities and much of its staff were taken over by the Canadian Broadcasting Corporation when it was created in 1936.
Read more about this topic: CNR Radio