As somebody who spent all my working life in and around newspapers, it set my heart aflutter when I saw a recent headline in the print edition of the Financial Post: “Postmedia rings up first-quarter profit”. A money-making newspaper company! Now there’s a man-bites-dog story for the 21st century.
Not really. Further reading cooled my hopes that the owner of the majority of Canada’s newspapers (about 150 titles) had finally discovered the secret of profitability in the digital age. The surplus was due to a one-time “gain on debt-restructuring”, rather than a dramatic reversal of fortune.
Ad revenue was down, circulation revenue was down, there was an operating loss of $46 million, and veteran Postmedia CEO Paul Godfrey conceded the company “must remain concentrated on the reduction of operating costs, divesting of non-core assets… and as we announced last quarter, salary cost reductions.”
So more layoffs, less content, and selling off the bricks and mortar, which after two decades of the same bitter medicine across the entire newspaper industry has failed to reverse its rapid decline. Yet there was something new in Godfrey’s remarks: his “hope that the federal government will come to the assistance of Canada’s media industry.”
Really? When a lifelong champion of free-enterprise and media independence pleads for government help – he called it a “big ray of sunshine” – that tells you all you need to know about the parlous state of the newspaper industry in Canada.
Godfrey is pinning his hopes on the Trudeau government’s “Canadian Content in a Digital World Consultation” – or DigiCanCon. Headed by Heritage Minister Mélanie Joly, a massive public consultation effort was completed last year and policy responses are expected this year. So far, it displays all the hallmarks of previous efforts by Liberal governments to shield Canada’s “cultural industries” from the evils of competition and particularly that old bugbear, “American cultural imperialism”.
Ottawa to the rescue
The last such attempt to protect the newspaper industry was the 1980 Royal Commission on Newspapers, launched under Prime Minister Pierre Trudeau and chaired by Tom Kent, a former newspaper editor and Pearson-era bureaucrat. The alleged emergency that prompted that inquiry was the sudden closure of the Ottawa Journal and Winnipeg Tribune and the merging of the Times and Colonist dailies in Victoria, turning all three cities into one-newspaper towns.
Actually, the corporate pruning of daily newspapers had been going on for decades across North America, but the same-day shuttering of the Journal and Tribune smacked of collusion between the old Southam and Thomson media conglomerates. The optics of reining in greedy corporations in the name of protecting press freedom and diversity was irresistible for the Trudeau government. Within a week we had the Kent Commission.
With hearings across the country, it examined the newspaper industry in excruciating detail, looking at everything from the economics of the business to the structure of newsrooms and even the perceived “quality” (or lack thereof) of various publications. This investigation of a supposedly shrinking industry was necessary, according to the Commission, because the concentration of newspaper ownership was “clearly and directly contrary to the public interest”.
At the time I was a senior editor at the Edmonton Sun and obviously interested in the health of the industry. Yet there was something odd about the Commission’s deliberations. For a probe into the lack of vitality and competition within Canada’s newspaper business, it was curiously blind to what was going on in the real world.
Because rather than floundering, the industry actually was undergoing a renaissance. New production methods had lowered costs, and surging consumerism had created a demand for types of advertising (autos, real estate, electronics) that newspapers were well suited to deliver. Newspapers were also becoming more colourful, both literally and figuratively.
Yes, some newspapers had closed, but beginning in the late ‘60s new daily papers had appeared in Montreal, Quebec City, Halifax, Toronto, and Edmonton. As the Kent Commission began its deliberations a new Sun daily launched in Calgary, and by the fall of 1980 the Winnipeg Sun had arrived in the Manitoba capital.
The Commission appeared not to notice any of this. In its 1981 report it painted a bleak picture of an moribund industry crying out for government intervention – which, of course, it was happy to suggest: controls on ownership, the break-up of existing companies, a Press Rights Panel to regulate the industry (reporting to the federal Justice Minister, no less), and mandatory contracts for editors to ensure their independence from the evil press barons who employed them.
Oh yes, and tax breaks for publishers who promised to play by the new rules.
Thankfully, the timing was bad. Trudeau senior was too busy battling Quebec separatist Premier Rene Levesque, patriating the constitution, and fighting an energy war with Alberta to take on the newspaper industry. So Kent’s recommendations went on the back burner (and were eventually buried by the Mulroney Conservatives).
The last print news boom
Which was just as well, because as it turned out the ‘80s and early ‘90s were something of a renaissance for Canadian newspapers. New technology revolutionized production and content. Circulation and profits boomed. To their credit, newspapers invested much of the bonanza on expanded news coverage. For a time you couldn’t cover a big international story anywhere in the world without tripping over half a dozen Canadian correspondents (myself among them).
Competition made newspapers more diverse and more interesting, while increased advertising provided acres of additional “news space” to cover more things in more detail. The press galleries in Ottawa and the provincial legislatures were bursting with new reporters, a small army of sports scribes were covering the new Canadian NHL teams, and it seemed hardly a month went by without some new feature section appearing in your local daily.
Diversity of opinion also flourished. After decades of lib-left domination of public commentary we suddenly had a national posse of conservative Sun columnists demanding fiscal responsibility, lower taxes, and even questioning the infallibility of social-democratic government! This was also the heyday of the feisty right-wing newsmagazine Alberta Report, which midwifed the birth of the Reform Party. The boom eventually produced a second national newspaper – the National Post – which on the front page of its very first edition printed stories bashing Liberal malfeasance and urging unification of the federal conservative movement. (Within a decade, the united Conservative Party of Canada would defeat the scandal-plagued Liberals.)
Sadly it didn’t last
On the surface, the newspaper industry could hardly have been in better shape to take on the digital age. It was flush with talent and money, and who better than professional communicators to take advantage of a revolution in communication? What was needed was a steady, thoughtfully-planned migration of newspaper content to the Internet, which readers and advertisers would surely follow. All would be well.
Or not. Canada’s newspaper companies were slow to understand they faced not just another technical innovation (of which they’d seen many) but a complete change in the way people access and consume information. Huge amounts were spent on digitizing content and creating newspaper websites, but readers – particularly the young – seemed unimpressed. They set out to explore a vast new multimedia world, and advertisers followed.
The response to declining circulation and advertising, not illogically, was to cut the biggest expense – staff. So over the past two decades newsrooms across Canada have been culled, culled, and culled again. Many of the people hired and trained in the ‘80s and ‘90s have fled to government or corporate communications. Journalists in their 50s and 60s are now routinely offered “packages” to get them off the books.
Given the speed and scope of the digital upheaval, perhaps there was no real alternative – we’ll be arguing that for a long time – but there’s no arguing that the hollowing out of the industry has been catastrophic for the quality of coverage of events and issues of importance to every citizen. Compared to 1980, Canada’s daily newspapers today are mostly predictable and dull, lacking in content and character, unable to attract readers and consequently advertisers.
Of course bailing out failing enterprises is a time-honoured compulsion among Canadian governments, so clearly it’s time for Ottawa to ride to the rescue again. The good news, if there is any, is that this time we may not need a multi-million-dollar Royal Commission to lead the way: before DigiCanCon had even had time to fully digest its public consultation, a dramatic call-to-action was issued last month in the form of a suitably alarmist and interventionist report from the Ottawa-based Public Policy Forum think-tank.
Titled The Shattered Mirror, the report was authored by Ed Greenspon, the 21st century equivalent of Tom Kent. Greenspon is the Forum’s president and CEO, a former editor-in-chief of the Globe and Mail, and a noted commentator on public policy. The Forum board he works for is comprised of a host of luminaries including Serge Dupont, the number two guy in the federal civil service, and Steve Orsini, the number one guy in the Ontario public service. Justin Trudeau and his cabinet will already have these folks on speed-dial.
Greenspon’s report makes a dozen recommendations, including tax changes to claw back some of the 70 percent of Canadian digital advertising revenue that currently flows to Google and Facebook – about $3 billion annually between them, none of which is ploughed back into Canadian news content or commentary. (In contrast, Postmedia’s 150 titles made less than $100 million from online advertising last year.)
That would create a “revenue stream” of $300-$400 million, which government could use to subsidize domestic digital news innovations it deems worthy. The report suggests using part of the money to fund a research institute to combat “fake news”, and loosening the non-profit and charity rules to allow “philanthropists” (activists) to get into the news business. There would also be $8 to $10 million to boost local coverage of courts, legislatures and city halls.
Finally, the CBC would be barred from competing for online advertising (a good idea), and its news content would be free for not-for-profit use “as an important antidote to fake news”. This would be the same CBC which recently sent out an actor to sell T-shirts emblazoned with the phrases “White Power” and “Make Canada Great Again” as a “social experiment” to measure the “Trump effect” in Canada.
Without the slightest trace of irony the Greenspon report notes “there is nothing new or novel about Canada looking to public policy to ensure there is journalism by Canadians for Canadians.” Perhaps that’s why this looks like a rewriting of the Kent recommendations for the digital age. Because the bottom line is the same: government regulation of the news business, with tax breaks and subsidies for those who agree to play by the new rules.
A crisis government can’t solve
The sad thing here is that the crisis outlined by Greenspon in his report is real. As he rightly says: “We are crossing into uncharted territory of public institutions and elected officials going inadequately reported; courthouses with no journalists to see that justice is being done; communities losing the social glue of local news.”
If anything, The Shattered Mirror understates the problem by assuming there’s a pool of discarded journalistic talent out there that can be quickly summoned to reinvigorate the nation’s news reporting and commentary. In reality most have discovered new jobs that pay better for less effort or are comfortably retired.
Ottawa could certainly take a look at tax laws that discriminate against Canadian media. Extending the GST to online ads purchased on foreign sites, for example; but if that creates additional revenue for Canadian companies, why not let them decide how to spend it?
I think we have to assume there will be further contraction in the Canadian news business – and soon. The National Post is transitioning out of print and it makes little economic sense for Postmedia to continue printing two money-losing newspapers in the same city. So, outside Toronto, the Sun newspapers seemed doomed. In the near term at least, Conservatives should brace themselves for a national news agenda increasingly dominated by the CBC, Toronto Star and Globe and Mail.
All of this has a depressing Back To The Future 1970s feel to it: a Trudeau in the prime-minister’s office and a national media dominated by a lib-left worldview. But it’s surely worth remembering that the 1970s also ushered in a renaissance in Canadian news coverage as new owners, new technology, new ideas, transformed the media landscape. As news and commentary continues its migration to the digital world, the same thing will eventually happen again.
Like everyone else, the media has been overwhelmed by the speed of 21st century communications and the tyranny of the 24-hour news cycle, and generally made quite a hash of things. Yet as National Post columnist Andrew Coyne pointed out in a thoughtful critique of The Shattered Mirror, “this is not a case of market failure, but of industry failure.”
He’s right of course. Just because existing newspaper corporations have failed to find a profitable digital business model doesn’t mean nobody ever will. Unless Canadians suddenly decide they are no longer interested in being surprised, shocked and occasionally delighted by the antics of their neighbors and their betters – which seems unlikely – a new crop of news publishers and producers will emerge to feed our natural desire to know about us.
It may be noisy, chaotic and at times even ugly – Tom Kent would surely hate it – but it won’t require government regulation and subsidy.
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