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

Government prolongs the agony for newspapers … just a bit

"We have reached the point where nurturing the green shoots is a better bet that propping up the gigantic, creaking, tottering timbers." Continue Reading Government prolongs the agony for newspapers … just a bit

Prepare to say goodbye to your local newspaper.

The Trudeau government has decided not to prolong the death agonies of the big newspaper chains, Postmedia and TorStar, or for that matter smaller independents like the Winnipeg Free Press.

Don’t take my word for it. In a series of gloomy prognostications earlier this month, John Honderich of TorStar and Bob Cox of the Free Press, who also heads the newspapers’ lobbying organization, predicted doom for the existing industry if Ottawa did not make a big move in this year’s budget. Cox’s group was asking for upwards of $150 million a year.

The government did announce some money for local journalism. Ten million dollars a year — or one-fifteenth of the industry’s ask – and seemingly little or none of it available for existing newspapers, since it will be directed to “underserved communities.”

If anything, the government seems to be preparing to pick up the pieces after the existing newspaper industry fails. And maybe that makes the most sense.

The newspapers’ pitch was variant on what the car companies asked for during the 2008 financial crisis – though admittedly the automobile manufacturers were looking for billions rather than hundreds of millions. Give us some money now, let us retool our businesses, and we can save jobs and economic activity.

But no one doubted that there was a market for cars. No one doubted that someone was going to make money selling them. Just that it would be Koreans, Japanese and Germans servicing the enormous market rather than Canadian and Americans. Of course, the newspapers have an additional argument. A domestic car industry isn’t a prerequisite to a functioning democracy. One of the most obvious effects of newspapers’ shrinking newsrooms over the last decade is that city halls, provincial legislatures and local courts are getting less scrutiny than they once did. Cox and others correctly point out that even now, after all the cuts, newspapers are still the core of the local news ecosystem. What happens when they disappear?

But at the very least, the government had to consider whether there was a plausible path for the major players in Canada’s newspaper industry back to profitability. Postmedia, which controls the only English-language dailies in major cities such as Vancouver, Edmonton, Ottawa and Montreal, as well as two of Toronto’s four dailies, is staying afloat by cutting expenses and selling assets faster than its revenue falls. But it is running out of assets to sell and cutting journalists means there is less and less for readers or advertisers to buy.

Last fall, Postmedia’s president, Andrew MacLeod, said that one of the company’s key strategies to return to profitability was developing a “symbiotic” relationship with Facebook and Google. Since then Facebook has retooled its algorithm to emphasize posts from family and friends. Ouch.

There’s an old joke about the Saskatchewan farmer who’s asked what he would do if he won a million dollars. “Keep farming until I go broke,” he replies. There’s no reason to think that the outcome would be much different if the newspapers won the $150 million of their dreams.

The government has given practically no detail about the $10 million dollars a year it is devoting to “local journalism in underserved communities” other than that it will be funneled through one or more as yet unnamed non-governmental organizations. The wording does suggest that the money will be available for communities such as Moose Jaw or Guelph, which have already lost their daily newspapers, and presumably others whose papers fail in the future. But Toronto, with four dailies hardly qualifies as underserved even if the National Post and Toronto Star are bleeding red ink.

Ten million dollars is not enough to make much difference unless it is strategically concentrated in particular communities or in particular kinds of reporting – say, covering city halls and legislatures. But once the government sets this structure up, it will have established a channel that could be used to funnel much larger sums into local journalism when the big chains crash.

What we have seen in communities where newspapers have already been shuttered is that new outlets do sometimes spring up to at least partially fill the vacuum. In the wake of TorStar and Postmedia conniving to shut down 24 community newspapers late last year, four new bi-weekly community newspapers have sprung up in Ottawa alone.

Village Media, which runs a dozen online news sites mostly in northern Ontario, also seems set to move into Ottawa. Village Media, whose largest newsroom, with eleven journalists, is in Sault Ste. Marie, clearly has eyes on some larger markets if and when Postmedia goes down. When TorStar’s Guelph Mercury closed its doors two years ago, Village Media started eight days later. This is at least part of the answer to what happens when the newspaper chains start to die.

We have reached the point where nurturing the green shoots is a better bet that propping up the gigantic, creaking, tottering timbers.

That having been said, the government does not seem to be in much of a rush. There was nothing in the budget in response to last year’s Shattered Mirror report from the Public Policy Forum which sensibly suggested that advertisers have the same incentives to use Canadian websites as they do to use Canadian newspapers and broadcast outlets.

The budget did contain an announcement that the government will explore not-for-profit and philanthropic models of journalism, which would require changes to tax laws among other things. The billionaire owners of the Globe and Mail and La Presse may be more inclined to keep them going as charities than as money-losing businesses.

Some existing outlets, like the online site Tyee, already rely heavily on reader contributions. And small communities may find this a useful model to replace the news outlets the private sector is abandoning. Perhaps in addition to the existing public model of journalism, in the CBC, and the struggling private sector model, a third sector could emerge.

The big newspaper publishers have been warning us all of imminent catastrophe. The government has accepted that the current end game is inevitable and is making some modest preparations for the day after.

This story was originally published on iPolitics and is published here with the author’s permission.