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  • Howard Law

Canadian Journalism is Going Broke

Recently I received the most startling news from Open Media:

“It’s official: 70 per cent of Canadians hate the Internet Tax, according to a brand new poll.”

Sorry, it was bolded in the original.

But in the interest of accuracy in media, let’s first answer a multiple choice question.

Which is the correct answer?

a. Open Media paid for the poll.

b. Canadians hate anything called a “tax.”

c. There is currently no “Internet tax” (other than sales tax).

d. If there was an "Internet tax", it would probably be phased in to replace the existing $450 million cable TV “tax” that few know about.

e. The existing cable TV “tax” helps pay for Canadian content in our news, information and entertainment media which fight overwhelming odds against US media outlets and tech companies.

f. Nobody knows about (e) either.

g. All of the above.

Ok it’s (g), “all of the above.”

Here is the reality we are facing today: Canadian journalism is going broke.

The revolutionary changes in the advertising market mean that US tech giants Google and Facebook have cornered 70 per cent of the Canadian digital ad market, and that digital advertising revenues are soaring as a share of overall media advertising revenues. What is more, the price of digital advertising is far lower than traditional media.

This is very bad news for Canadian newspaper, magazine, and television news media which have always relied upon advertising revenue for more than 80 per cent of their costs. At the same time, the era of free online content has cut deeply into alternative revenue streams such as subscription fees.

Canadian democracy cannot survive without a financially stable and independent news media. In an era of fake news, who can imagine the financial collapse of reliable journalism? Public opinion polls (commissioned by the non-partisan Public Policy Forum think tank) tell us that Canadians understand the tight connection between news and democracy. What they don’t necessarily realize is the perilous state of the news industry.

Unifor represents 12,000 Canadian journalists and media workers, and we see the reality of the situation close up. Over a third of Canadian journalist jobs have disappeared since 2010.

The federal government should act, and here are just a few of the major levers to pull:

  • Save local television news by updating the CRTC regulatory rules that tap prosperous industry players for a fair reinvestment in Canadian media ----not just the US tech giants, but also the Canadian Internet Service Providers (ISPs) who profit on every byte of online data;

  • Modernize tax rules under section 19 of the Income Tax Act that reward Canadian advertisers for patronizing Canadian television stations and news websites instead of American media;

  • Use specific tax credit strategies to incent the re-hiring of Canadian journalists and media workers.

As far as the “Internet tax” is concerned, Canadian ISP companies ----the highly profitable Bell, Rogers, Telus, Videotron, Shaw, Cogeco, and so on--- are making big money on every byte of data sold to its customers for gaming, streaming video, and website reading.

We know these ISP companies can afford to reinvest in their own country’s media content, whether it is news, information or entertainment. Given that most of them areowned by the cable TV companies, they are already required to pay for Canadian content through the little known “cable tax” of 5 per cent of their Canadian revenues.

It is inevitable that as Canadians cord cut and cord shave their cable TV in favour of streaming video, the $450 million cable tax fund that feeds Canadian content will continue to diminish. That funding needs to be replaced, and where else to get it than from the streaming video business that is replacing cable, in most cases sold to you by the very same media companies?

But Open Media is right about one thing: affordable access to basic Internet service is an important public policy goal. Unifor supports it, too.

That is why we proposed to the federal government that if it adopts an Internet levy it exempt the cost of a truly basic Internet service of about $25 per month. That way the poor don’t get hurt if the corporations try to pass on the cost of the levy to customers. A levy on the portion of Internet bills above $25 per month could raise a much needed $118 million for Canadian content.

Howard Law

Director, Media Sector



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