March 8, 2022
5 – minute read
On the cusp of the federal government’s introduction of an Online News Bill in the House of Commons, the Public Policy Forum of Canada has published its sequel to the 2017 Shattered Mirror report documenting the crisis in Canadian journalism.
The report “The Shattered Mirror – Five Years On” written by Ed Greenspon and Katie Davey arrives at conclusions about funding solutions similar to where I landed in my post two weeks ago, only with far greater insights, details, and ideas.
With any luck, it’s not too late for Heritage Minister Pablo Rodriguez to incorporate them into the Bill.
While the Bill is about refereeing the commercial relationships between the digital distribution platforms Meta and Google and the media organizations that supply news content to their audiences, the government’s role as regulator allows it to put some public interest conditions into the legislation.
The Report recommends several improvements to Australia’s 2021 News Media Bargaining Code which is the blueprint for Minister’s Bill:
- Media organizations seeking better compensation for news content under the Bill must deliver original journalism that “better informs our democracy,” rebuilding news coverage of public institutions, especially at the local level.
- News outlets that distribute on any media platform —not just mainstream news organizations— should be eligible for this compensation regime so long as they meet the professional standards established in 2019 by federal aid to journalism program, as Qualified Canadian Journalism Organizations (QCJO).
- There must be public reporting of the final compensation arrangements and a guarantee of non-discriminatory negotiating practices. Transparency will verify that Meta and Google aren’t playing favourites among news organizations and that audiences are aware of the commercial relationship between the Big Tech and news organizations when reporters are doing beat coverage on them.
As part of their recommendations, the authors of the Report point to the importance of establishing an independent governance body —arm’s length from Big Tech, the media, and the government—- responsible for eligibility and to superintend the overall arrangements.
The constitution of a governance structure provides a useful pivot to the other focus of the Report, the federal government’s Local Journalism Initiative (LJI).
The $10 million per year LJI is the less well known of the federal Liberals’ various aid to journalism programs such as the $100 million per year QCJO subsidy to editorial coverage. Both the LJI and QCJO have a five-year expiry date and the LJI program is coming up for reconsideration first. (I have posted a summary of the various federal programs).
The LJI program has been focussed on funding one-year journalist internships in community newspapers and small cable stations, favouring rural communities that have become news deserts and also in underserviced Indigenous and racialized communities.
The Report says the LJI program has passed its probationary period and it’s time to graduate from an experimental to a permanent program with more money, simpler application procedures, longer funding commitments, and independent governance (it’s currently administered by news industry associations whose own members apply for its grants).
This independent body might also be confirmed by the Canada Revenue Agency as a “qualified donee” eligible to accept tax-sheltered philanthropic donations for re-distribution to non-profit and, with some flexibility from the federal government, for-profit news organizations as well. (The Report observes that philanthropic support for journalism has been minimal in Canada and, even in the US with its longer tradition of supporting journalism, has hardly made a dent in the overall loss of news coverage.)
As I observed in my previous post, there is a golden opportunity to establish a single and independent governance body to administer both public and private contributions to journalism, whether the funding source is the federal government, Big Tech, other industry levies, or philanthropic donors. That improves the chances of a coherent national program of supporting news journalism on all distribution platforms.
There remains a fly in the ointment, and it’s a big fly. To be blunt, it’s the Postmedia problem.
The largest print journalism organization in the country (though not as big as Bell Media) has operated under a crushing corporate debt ever since the break-up of the bankrupt CanWest Global media empire in 2009. That’s when Conservative rainmaker Paul Godfrey raised $1.1 billion from Canadian and American investors at high interest rates to buy up what is now the Postmedia chain including the National Post and 120 metropolitan and community papers. It went further into debt in 2015 adding the Sun Media chain at the cost of $300 million and recently bought New Brunswick’s Irving papers for $15 million in cash and shares.
That $1.1 billion debt (and the workforce) has steadily dwindled since 2009. Still, Postmedia owes $67 million to its first lien Canadian investor Canso and $189 million to second-lien American hedge fund Chatham Assets. The share price is comatose and the company doesn’t pay dividends. The executive compensation has been extravagant, although mostly a rounding error compared to the debt payments.
Although it should be irrelevant to good public policy, there is the slavishly Conservative editorial stance and edgy right-wing opinion writing that fuels popular enmity in at least half the voting population: people who vote for MPs who will vote on the Online News Bill.
The policy problem is this: why should federal legislators help Postmedia if every dollar of aid to journalism, including Big Tech contributions, gives Postmedia a windfall opportunity to pay off another dollar of improvidently acquired debt instead of hiring journalists?
It’s difficult to design a policy solution to this problem, whether it’s the Online News Bill or the LJI and QCJO programs (neither of which address this issue).
The government could impose draconian measures that go against the grain of regulatory traditions, but are not unknown in government-sponsored bailouts: imposing limitations on debt-repayments, dividends and executive compensation in order to be eligible for any of these funding supports.
Another more technical mechanism could be borrowed from the CRTC’s regulation of television local news which sets an 11% baseline of minimum editorial spending as a percentage of overall revenue, even if that revenue is falling. The baseline became useful when the CRTC established a second, supplementary source of funding for news coverage. That additional funding has to be spent on “incremental” news coverage —meaning the opportunity for a public accounting documenting additional reporters covering more stories.
A comparable model might be designed to prevent Postmedia’s bondholders from pocketing new funding earmarked for journalism.
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