How the bottom fell out of Canada’s news media

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.