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Will the Next Parliament Save Journalism?

November 18, 2019

 

Now that the dust of Election 43 has settled, the NDP, Bloc Quebecois and Greens will be nipping at the government’s heels to implement progressive legislation. That must include saving journalism and Canadian culture.

 

They need saving. The quarterly corporate reports published by Torstar and Postmedia just days after the Election illustrate that.

 

Postmedia results were less horrible than last year. But the downward trend continues relentlessly: the nation’s biggest written news organization sustained a 16% ($64 million) decline in print revenue on an annualized basis, mitigated by $8.6 million growth on the digital side. That digital growth is less than the year before. So don’t hold your breath waiting for the dramatic turnaround.

 

Torstar results were arguably worse. Print advertising was down 23%.

 

Both Torstar and Postmedia booked federal journalist labour tax credits from the 2019 Budget, worth an annualized $10 million for Postmedia and $6 million for Torstar.

 

The federal aid package announced last March is $595 million over five years: fold in the $50 million federal Local Journalism Initiative announced a year earlier and some quick arithmetic gives you $130 million annually for sinking news organizations.

 

The federal aid is, in theory, countervailing the losses caused by Google and Facebook siphoning off the news industry’s advertising income. Ad revenue accounts for somewhere between 80 and 90% of news organizations’ total revenue. It pays the bills for journalism.

 

Last year the print news industry saw a $143 million decline in advertising revenue, a nine per cent loss, a repeat of results from the previous six years.

 

Based on the latest Torstar and Postmedia results of 23% and 16% in further losses, that rate of decline has likely increased. The federal assistance was probably too small to begin with. It’s already falling further behind.

 

NDP leader Jagmeet Singh said during the Election campaign that the Liberals’ aid package was only a band-aid. That might have been a harsh assessment had the industry been able to make bigger gains in signing up digital subscribers and selling digital advertising to supplement the federal aid. But the much hoped for countervailing gains in digital revenue are not materializing. The federal aid is indeed a band-aid and it’s peeling off.

 

That’s why the Liberal government has to get bolder on saving journalism: it must legislate an end to the $1.6 billion corporate tax loophole that rewards Canadian advertisers for choosing Google and Facebook over Canadian online advertising at which our news organizations excel. Closing the loophole will repatriate millions of digital ad dollars and swell federal tax coffers with money that can be used to increase the aid to journalism program: exactly what the NDP and the Greens campaigned on. The Bloc supports it too.

 

Local TV news, which is excluded from the federal aid program, is headed in the same downward direction though the worst of the crisis is not yet upon us. This has been a cue for inaction by the federal Liberals and the federal broadcasting regulator, the CRTC.

 

CRTC regulations force Canada’s biggest media companies to cross subsidize their unprofitable local news operations by complying with minimum spending requirements. But the spending requirements are tied to a fixed percentage of steadily declining advertising revenue thanks (again) to Google and Facebook.

 

Our broadcasters have responded to sinking revenues by cutting spending on local news, which CRTC regulations allow them to do. The cost cutting shows up in staff reductions, most recently in the CTV and Global local news operations where both broadcasters have replaced the journalist-videographer tandem with stand-alone videojournalists. City-TV cut local content from its Breakfast Television show at its western stations. This steady drip of staff reductions has been going on for years.

 

If the federal government thinks its important that Canadians have local TV news, it’s going to have to do a better job of regulating broadcasting. So long as cross subsidies to money-losing local news are tied to a percentage of shrinking revenues, our broadcasters are going to reduce staffing.

 

What’s frustrating is that the overall revenue pie in broadcasting is not shrinking: in fact it’s exploding. But all of the growth is going to the unregulated American streaming companies ---Netflix, Amazon, Disney, Apple, CBS, DAZN, and NBC Universal----who don’t pay anything into the cross subsidization pot that pays the bills for Canadian news, sports and entertainment.

 

The Liberals made a campaign promise to fix that, as did the NDP and the Greens. The Bloc is also onside. Importantly, we don’t have to wait for Broadcasting Act to be painstakingly reviewed and debated over the next four years. Under the existing legislation, the federal cabinet can direct the CRTC to immediately end the regulatory exemption enjoyed by Netflix and the other Big Tech broadcasters. It just might save local TV news.

 

 

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