The Centre Block of the Canadian Parliament buildings. Photo courtesy of Saffron Blaze/CC BY-SA 3.0.

Government should not be picking winners and losers in the media world

Winnipeg Free Press publisher Bob Cox says there is no place where a truly competitive media market exists in Canada. Continue Reading Government should not be picking winners and losers in the media world

In the debate over whether newspapers should be helped by the federal government, perhaps the most hilarious argument against such aid is that the marketplace should sort out the winners and losers in news media.

Federal Conservatives have embraced this idea, as have some commentators who say the best thing for the government to do is nothing, but to let economics dictate who provides news.

My answer to this is simply to ask what marketplace they are talking about, because in Canada today there is virtually nowhere that a truly competitive marketplace exists for media.

Heritage Minister Mélanie Joly, in her recent speech on cultural policy, said her approach is not to bail out industry models that are no longer viable. If this is the case, she will have to rethink the entire system of public support for media in Canada.

My colleagues and I have sought federal help for news publishers not because we cannot compete or transition in the digital age, but because we are faced with a marketplace that is utterly distorted by public subsidies and regulation. Newspapers are not the lone medium asking for help; they are the one traditional medium left out in the cold.

There are real issues that go beyond economics – fundamental questions about the impact on communities – and democracy itself – if traditional sources of news and information are lost.

These can be debated forever and the result will be opinions, not definitive answers.

What is definite is that the government controls and funds media in many ways – so much so that I argue that true market-based transition is impossible in this age of undeniable digital disruption.

Start with the CBC. The public broadcaster is aggressively promoting itself as a local news provider (albeit only in larger urban markets) and spending taxpayer money to do so.

How can any media outlet serving a broad general audience develop new and innovative ways of providing news and information when a competitor is doing the same thing without the need to charge for it or develop some other commercial business model to support it?

Move on to local TV. Local TV news is a money-losing proposition.

Conventional TV stations lost $114 million in 2016 and the losses were spread across Canada, according to Statistics Canada. Consulting firm Nordicity prepared a report for the CRTC last year warning that nearly half of local TV stations could be off the air by 2020 without a boost to revenues to pay for local programming.

The answer? The CRTC has directed nearly $90 million to support local television news, money redirected by regulation, an involuntary levy on TV viewers who were never asked if they want to support local news.

Thus, local TV provides subsidized news in a marketplace where other players must find viable commercial business models without such help.

How about magazines? Most of the $75 million Canada Periodical Fund goes to support the Canadian magazine industry, with companies such as Rogers getting multi-million-dollar subsidies each year. Yes, taxpayers underwrite part of the cost of Maclean’s. They also pay some money to community newspapers.

I could also mention the federal tax credit for Canadian film and video production, which pays for 25 per cent of the labour costs on such productions.

Then there is the Canada Media Fund, which primarily finances television shows and is paid for by taxpayers and involuntary levies on users of cable and satellite TV – ie. most viewers. Do you like Kim’s Convenience? It doesn’t matter. You’ve already paid for it through taxation and your cable TV fees. And you still have to sit through the commercials.

Want to talk about ownership? Almost all traditional news media in Canada are subject to restrictions that have the end result of requiring Canadian ownership. In the case of newspapers, advertisers cannot write off spending on print advertising if the property is not Canadian owned.

American firms such as Google and Facebook can operate freely in Winnipeg, extracting large amounts of ad dollars from local businesses through digital media. But these same firms could not try to do the same thing by buying a local newspaper, TV station or radio outlet, which also have extensive digital operations.

Canadian companies are also restricted in how they transition or compete. One way of preserving local news coverage in the digital age would be to combine the resources of a newspaper, TV station and radio outlet in a single market. But it is not possible because a company can own no more than two types of traditional media in any market.

Newspapers are actually very well-positioned to compete and transition in the digital age. Our audiences are bigger than ever. We still employ the majority of journalists doing fact-based, independent reporting. In many cases, our digital efforts are far ahead of what traditional broadcast media have done.

But the bottom line is that there seems little appetite to change the system of public and private support for media that Canada has. There are also many strong and vested interests keeping the system pretty much as it is – and a reasonable argument that it is necessary to ensure Canadian content continues to be produced.

What newspapers have asked for is not to be left out. Government should not be picking winners and losers in the media world. By doing nothing, the government would be doing exactly that.

Bob Cox is the publisher of the Winnipeg Free Press and the chair of the News Media Canada board of directors.