The following excerpt from my forthcoming book, Tomorrow’s News: How to Fix Canada’s Media, was published by The Hub on October 16.
The bottom
abruptly fell out of Canada’s news media in 2023 after decades of federal
neglect, and it kept falling in 2024. The precipitating event ironically saw
the government only trying to help by passing the Online News Act, but by then
a collapse was perhaps inevitable. Instead of safeguarding a healthy and
diverse news media ecosystem, as governments had done in other countries,
Ottawa’s policy had for decades seemingly been to let media owners get away
with anything they wanted. The result was a series of blunders that only kept
making things worse. Canada’s press had thus been reduced to banana republic
status, with its two dominant newspaper chains owned by private equity players
and U.S. hedge funds that were bleeding them dry and stripping their assets.
Their massive
lobbying campaign persuaded the federal government to give the newspaper
industry first a five-year, $595-million bailout in 2019, nominally to help
them make the transition to sustainable digital publications. Then the
newspaper lobby mounted a second campaign aimed at persuading Ottawa to force
Google and Meta to subsidize them on the dubious grounds that the digital
platforms were stealing their news stories, rigging the sale of online
advertising, and/or enjoyed an unfair bargaining advantage over them. The real
reason of course had everything to do with money, as the digital giants had
been taking billions in advertising dollars that once went to newspapers by
perfecting target marketing online. The bottom fell out when Meta said no to the
Online News Act and dropped news from its Facebook
and Instagram social networks in Canada instead of paying up, leaving the
embarrassed Liberals of Prime Minister Justin Trudeau with little choice but to
extend the 2019 bailout.
Canada’s annis
horribilis for news media bottomed out in mid-2023 when unusual trading in
Postmedia Network shares forced the company to admit that it was in merger
talks with Torstar, its largest competitor by far. Negotiations broke off when
an agreement could not be reached on how much of the debt held by Postmedia’s
owning hedge funds would be carried over to a combined company. Despite the Star’s
liberal politics and Postmedia’s ardent conservativism, Torstar and Postmedia
were now corporate birds of a feather. The chains had been investigated on
criminal charges of monopoly and conspiracy after they traded 41 newspapers in
2017 and closed 36 of them, giving each other even more local monopolies, but
charges were never laid despite some incriminating evidence.
The same week
that Postmedia admitted it was discussing a merger with Torstar, Bell
eviscerated its broadcasting staff and asked the government to dial back its
obligation to provide news coverage. The country’s largest and most profitable
media company announced the layoff of 1,300 workers – or 6 percent of
its Bell Media division – closed a half dozen radio stations, and shut down
CTV’s last foreign bureaus in London and Los Angeles. It also asked Ottawa to
let it drop local news on its CTV stations, claiming it had been losing tens of
millions of dollars by providing it but ignoring the fact that carrying news
was part of its public service obligation provided in exchange for its
otherwise lucrative broadcasting licences. Bell was hardly hurting, having made
a 2022 profit of $10.2 billion, which was more than the GDP of dozens of
countries, at a profit margin of 42.2 percent. So rapacious were its
shareholders that the company’s 2022 dividend of $3.87 per share marked the fourteenth straight year that the company had hiked its annual payout by at least 5 percent, and this time it somehow even exceeded the company’s earnings
per share of $3.40.
Outrage grew
after Bell’s financial results for 2023 were released and showed that its
profits had risen by more than $200 million to $10.4 billion. Its dividend
increased by only 3.1 percent to $3.99, however, sending its stock price down
by $1.44 to $37.95 that day. Bell’s telecom division made a profit margin of
more than 44 percent, but its media division, which included CTV, cable
channels such as TSN and BNN Bloomberg, along with its broadcasting stations,
was not quite as profitable. Its 2023 earnings fell by 6.4 percent to $697
million and its profit margin was off slightly to 22.5 percent. In response,
Bell announced a major restructuring designed to save it $250 million a year by
laying off 4,800 workers, or 9 percent of its entire staff, and selling 45 of
its radio stations. Trudeau called the layoffs “a garbage decision by a
corporation that should know better,” while B.C. Premier David Eby went even
farther, calling Bell and other media owners “corporate vampires” because they
bought up news outlets and then “sucked the life out ofthem.”
Rogers, the
country’s second-largest media company, became almost as big as Bell in 2023
when it took over the Shaw cable empire that monopolized Western Canada. The
federal Competition Bureau went to court in a vain attempt to stop the
takeover, but its enabling legislation was so weak that a judge instead awarded
Rogers $12 million in legal costs. A desperate Trudeau soon eliminated the
Competition Act’s contentious “efficiencies defence,” which allowed mergers to
stand even if they created a monopoly if they also brought cost savings to the
companies, which most mergers after all aimed for. The amount of money that the big telecom
companies were taking out of the wallets of Canadians was almost as astonishing
as the amount their chief executives were putting into their own. Bell CEO
Mirko Bibic was paid handsomely to cut a swathe through Bell’s workforce and
keep increasing its dividend, pulling in a compensation package of $13.6
million in 2022, including $10.6 million in bonuses and stock options. That was
nothing compared to the $31.5 million hauled off that year by Rogers
CEO Tony Staffieri, which included bonuses and stock options worth $17
million in large part for stickhandling its purchase of Shaw. Even in the
newspaper industry, rich bonuses were awarded to executives who came up with
successful money-making schemes, as witnessed by former Postmedia CEO Paul
Godfrey’s pay packet that topped $5 million with bonuses and stock options in
2019 after he masterminded that year’s newspaper bailout.
It’s not like
nobody saw this coming. Big Media’s growing power was a problem Ottawa had been
warned about repeatedly for more than 50 years by its own inquiries, yet it did
little more than allow media companies to grow bigger and bigger until they
were arguably more powerful than the government itself. A 2006 Senate report on
news media placed the blame for Canada’s elevated level of media ownership
concentration squarely on its ineffective federal regulators, which it accused of nothing short of “neglect”
for failing to halt the consolidation. The Competition Bureau had cozied up to
Big Media more like a lapdog than a watchdog in a phenomenon known as
“regulatory capture,” or regulation in the best interests of the regulated, not
the public. In broadcasting, the CRTC had arguably done even worse, as it allowed media owners to literally bribe their way into monopolies by making so-called “public benefits” payments.
It looked like
the country’s news media were rapidly dying, but those under more sustainable
management were actually doing quite well. The Globe and Mail, which was
owned by the ultra-wealthy Thomson family, continued to invest in quality
content that attracted 250,000 online subscribers and was making an admirable
transition to hybrid print/online sustainability. Winnipeg Free Press
owner FP Newspapers, which also published the Brandon Sun, was one of
the few remaining newspaper companies in Canada that was publicly traded on the
stock market and thus had to report its earnings. It was also keeping its head
above water with a paywall that first asked readers to register after a few
free articles, then demanded they pay after a few more. Its annual reports
showed that while its revenues had fallen by almost half in the previous
decade, its profits had held steady at about $7 million in recent years, and
its profit margin was comfortably in the double digits.
Many felt that the Online News Act was a clumsy
attempt at a government shakedown of the prosperous digital platforms on behalf
of the country’s still-powerful newspapers, the largest of which were now owned
by vulture capitalists. “The notion that we should be compensated for the
traffic Facebook and Google send our way, often at our behest, is bizarre in
the extreme,” wrote Globe and Mail columnist Andrew Coyne, who was one
of the few mainstream journalists to speak out against the scheme. “This has
nothing to do with fairness, in other words. It’s a shakedown, pure and simple.
But it is hostage to its own illogic. The reality is that the news business
needs Facebook and Google far more than they need us.”
University of Ottawa professor Michael Geist, who
studied Internet law, called the Online News Act “an embarrassment
to the news media lobby that demanded it.” Geist counted more than 100
registered lobbyist meetings by News Media Canada with government officials and
politicians over the previous three years and chronicled “skewed coverage of
the issue in which the overwhelming majority of news stories backed government
intervention.” Even worse was the corporate censorship Geist said he
experienced first-hand after editors at a newspaper he did not name accepted an
opinion article he had written, only to have it spiked by upper management. He
wasn’t the only one, as Carleton University professor Dwayne Winseck reported
that the same thing happened to him twice. Worst of all, according to Geist,
was the high-handed process followed by government, which saw the ruling
Liberals attempt to railroad Bill C-18 through Parliament on a fast track
without even hearing from Meta. “This represents nothing less than a
government-backed shakedown that runs the risk of undermining press
independence, increasing reliance on big tech, and hurting competition and
investment in Canadian media,” he wrote.
Geist deemed the Online News Act a “massive policy blunder” after Meta began to block news in Canada following its passage. “The
bill is already a failure and seems certain to cost the Canadian media sector
hundreds of millions of dollars.” Former CRTC vice-chair and Calgary Herald
publisher Peter Menzies called it “the most spectacular legislative failure in Canada’s living political memory,” and noted that Canada was “on the verge of
destroying far more journalism jobs than it ever could have hoped to save.”
Coyne called it “a policy catastrophe on a grand scale” and argued that the government was interfering in
the natural evolution of news media. “In its desperate attempt to prop up the
media’s past, the government has instead conspired to destroy its future.”
Ottawa’s
inaction and then its misguided actions had pretty much ruined Canada’s news
media, and everything it did only seemed to make things worse. The country’s
largest newspaper chain appeared set to crash and burn after years of being run
into the ground by the vulture capitalists who had been profitably dismantling
them. Its largest telecommunications companies, despite being wildly
profitable, balked at living up to the public service news obligations of the
broadcasters they had been allowed to acquire. Emerging online news media were
seemingly being sacrificed in Ottawa’s attempts to appease the country’s press.
The worst part was that the government had repeatedly refused to follow the
advice of its own media inquiries going back more than a half century, instead
preferring to follow the dictates of media owners. It was small wonder that
such a recipe for disaster should result in a media cataclysm.
