MediaPolicy.ca

July 23, 2023

As the grudge match between Canada and California continues this summer, some opponents of Bill C-18 explicitly call for the natural death of Canadian mainstream news outlets while others at least have a proposal.

Taylor Owen and Supriya Dwivedi added their voices to the debate this weekend, calling for the government to cap Google’s liability for compensating news outlets, pay Meta’s share for them, and then “sunset” Bill C-18. They have other suggestions to provide public support for news and competition investigations against Big Tech’s advertising monopolies.

For our part, MediaPolicy.ca remains in the ‘fight on’ camp. We are going to have to settle once and for all whether we are governed by Ottawa or Silicon Valley. There is a pipeline of more media and data regulation of the Big Tech footprint in our country. Bills C-18 and C-11 are just the beginning. The government will be tabling an Online Harms Bill in the fall which, even though it promises to rely heavily upon social media platforms regulating themselves, will be yet another encounter between Canada and California. Then there is AI. And the Digital Services Tax. And perhaps real controls on the scraping of personal data. 

We seem to be in the summer lull of the Big Tech C-18 news throttle, although that could change very quickly with the recall of Parliament in September. While it is possible Heritage Minister Pablo Rodriguez is close to a deal with Google, its spokesperson wasn’t very encouraging in a recent Washington Post article that provided an update to American readers.

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While some may wish a natural death for privately owned mainstream media, others wish the same for the CBC. 

This is not a reference to Pierre Poilievre and his promise to defund the public broadcaster. It is a reference to Andrew Coyne continuing to call for ‘refunding’ —as mendacious a term as you will find— the CBC by eliminating the Parliamentary grant and imposing a paid subscription model. 

The next question would be how the pay-for-content CBC differed from any other news outlet and why aren’t we privatizing it.

A recent Angus Reid opinion poll drew attention for its conclusions on the wince-inducing levels of support for defunding the CBC.

While not minimizing the results, they ought to be benchmarked against an almost identical poll from Mainstreet in September 2022. Over the intervening nine months there has been a noticeable move from the ‘Agree’ column to ‘Disagree’ with defunding:

The high level of ‘defund’ support from Conservative Party-leaning respondents did not change much, except that the “don’t know” replies were fewer. Possible conclusion: repeat messaging from Conservative HQ is effective in securing donor and voter base support for this wedge issue.

The NDP-leaning respondents did not change much either, presumably because the CBC is a sacrament to those voters so they were always strongly opposed to defunding.

The Liberal-leaning results shifted. There are less “don’t knows” and perceptible movement of ‘defunding supporters’ to ‘defunding opponents.’

On the assumption that there is nothing the CBC has done in the last nine months to change public opinion on defunding, it is possible the reason for change among Liberal-leaning respondents is that they now see the CBC as a Conservative wedge issue and are responding in kind. 

Then there are the Bloc-leaning respondents and this is where the action is. There is a very noticeable move from defunding-support to defunding-opposition. The overall Québec results show a similar shift.

Here is a more fulsome snapshot of the two polls:

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Paul Wells has a follow up report on the crisis at Canada’s only retail book-store chain, Indigo. It won’t cheer you up. He calls for unspecified federal government intervention on the basis that Ottawa is responsible for creating the situation several years ago by permitting Indigo to swallow Chapters.

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Finally, the recommended read for the week is a video. The Zeds may have TikTok, but we boomers have William Shatner. Beam me up.

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Photo: Alos Wonaschuetz

July 16, 2023

The silver lining in the cloud hanging over the future of news journalism in Canada is that we get a lot of public opinion polls. This week Angus Reid published two.

The first was about Bill C-18. The headline finding was that nearly half of Canadians, heavily concentrated among Conservative supporters, want the government to cave in to Meta and Google in the face of news throttling on their platforms. MediaPolicy.ca wrote about that here. 

A second and self commissioned poll lead with a finding that a majority of Canadians don’t want government to ‘fund newsrooms.’ The timing of the poll seemed strange: federal aid to newsroom —-the QCJO program, readership tax credits and relaxed rules on charitable donations to journalism—- dates back to 2019 and has not been in the news.

The question was blunt and without nuance about the word ‘funding’ and asked respondents to choose between two policy extremes even if they did not completely agree: government funding of newsrooms or none at all.

The poll moved on to measure continued support or ‘defunding’ the CBC:

As you can see the poll results were, once more, heavily skewed by voter preferences. 

The pollster then made this editorial supposition: perhaps the apparent contradiction between support for publicly funded CBC newsrooms and opposition to government aid to private sector newsrooms is because respondents admire the CBC’s non-news programming in sports and entertainment or because of the public broadcaster’s ‘broad mandate.’

Upon reflection, perhaps the pollster is aware of this graphic:

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The Canadian government’s contest of wills with Meta and Facebook continues.

At the beginning of the week, Heritage Canada issued a statement of the federal cabinet’s intention to pass a regulation under the Online News Act providing Google and Facebook the opportunity to obtain a regulatory exemption under section 11 of the Act by committing a minimum amount of funding in deals with a minimum number of news outlets. 

This suggests Heritage Minister Pablo Rodriguez has either made a deal with Google, or is headed towards one by filling in the blanks for ‘minimum’ with actual numbers. The ‘exemption’ in C-18 was designed by Parliamentarians to push the platforms and news outlets to voluntarily negotiated deals and avoid mandatory arbitration. The CRTC makes the judgement call on exemptions based on a long list of criteria set down by MPs in the Bill. 

By enacting a cabinet regulation pinning down the most crucial variables in the exemption process in advance,  the government is ceding what the platforms have said publicly is their greatest concern, limited liability for payments to news outlets. 

We will see now if the platforms ever wanted a deal at all in Canada. Pro tip: Meta doesn’t.

In the meantime, the Big Tech threats continue with two new ones this week. Google let it be known that they are not going to release their search engine AI tool in Canada because of “regulatory uncertainty.”

Next, the Google filing to the CRTC at the outset of the Bill C-11 implementation process threatens an unspecified CUSMA trade complaint if it doesn’t like what it sees at the end of the process for its YouTube platform:

14. These submissions are further made without prejudice to the application of the USMCA to any conditions of service that affect issues of Canadian market access and entry of non-Canadian services established by the Commission for online undertakings.

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Meanwhile, Hollywood is on fire. 

Not literally of course, but the actors’ union SAG-AFTRA has joined the Writers Guild of America on strike. The issues include money, diminishing work, and contract language protecting against job replacement by AI tools. The speculation is that the strike will last for months and heavily impact TV and film production. 

On a parallel track, and perhaps intersecting with the strike, is the ongoing market shake-out among the streamers. MediaPolicy linked to a story about that three weeks ago: this week there is an in-depth analysis in the Wall Street Journal about the financial predicament of one of Hollywood’s Titans, Disney.

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On the artificial intelligence front, Associated Press reached an agreement with Open AI to grant the large language model developer OpenAI access to its news archive. Something to watch.

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The best read of the week for me was posted by New York Times columnist David French, “Who Truly Threatens the Church?” At one level, it’s about the creeping fascism of the Christian nationalist movement in the US. But it’s more introspective, and more elevating, than that.

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July 11, 2023

Yesterday we had a flurry of activity on the Bill C-18 file. What got the most attention was Heritage Minister Pablo Rodriguez announcing that draft regulations under the recently proclaimed Online News Act that will —if I am parsing the opaque government-speak correctly— establish a scale of minimum financial contributions to news journalism payable by Big Tech platforms to a minimum number of news organizations if they want to qualify for a regulatory exemption. The dollar amount of that minimum will depend upon the size of the platform.

The timing suggests that the government has made some progress in its talks with Google, but there is more to be revealed in time.

The other development on the C-18 file was the publication of an Angus Reid poll, “Concern over backlash and blocked access to Canadian content drives pushback against Bill C-18,” on popular support for the Bill.

In the past, we’ve seen Abacus polls published on C-18 and Bill C-11 (the Online Streaming Act) which were built on argumentative and manipulative questions.

Not so this new one from Angus Reid. But judge for yourself, the questions are here.

This is the first poll on C-18 in quite some time after several months of opposition to the Bill expressed by the Conservatives and others on social media. And of course, it is the first poll to take into account the full impact of Google and Facebook’s temporary news throttling and their threats to make it permanent.

The pollster’s announcement leads with the figure that 48% of respondents want the government to blink in response to those threats, 26% do not, and the remaining 25% aren’t sure.

Another interesting change in public opinion is that the overall support for a policy of Big Tech paying for news content has fallen from over 80% to 62%. (It had been quite even across all voter preferences.)

Exploring the poll results by data categories, we can make some other observations.

The responses to the “blink” question are heavily skewed by voting preference. Seventy-five per cent of Conservative voters want to blink, but only 33% of NDP and Liberal voters, and 15% of Bloc supporters. On the other hand, the ‘not sure’ vote is firmly parked with those latter three parties; the Conservative voters are very sure of themselves (some blog humour, forgive me).

The Liberals might have cause for reassurance with these numbers: they have taken just about everything thrown at them in opposition to the Bill and have now priced in the Big Tech threats, at least until Facebook begins its full news block in the coming weeks. Then we’ll see what happens to that ‘not sure’ vote.

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July 9, 2023

I miss Christie Blatchford’s writing a lot. She had a beguiling, unnameable quality to her journalism. I think I will call it ‘pith.’

But now we have Paul Wells whose writing has always been great but increasingly it is…again I search for words, but so as not to embarrass him I will call it ‘oak casked.’ You know, like good wine.

Of course this is my chance to segué to my recommended read of the week which is Wells’ third instalment in his dirge for news journalism. Except the final instalment takes us somewhere I had not expected (I had expected a graveside ceremony). That somewhere is a reflection on how social media is not only responsible for tearing down the old world of curated journalism but also for the disfigurement of political communications from politicians and governments.

I will tantalize you with this piece of proverbial wisdom quoted in his last piece, attributed to a former Harper staffer who observed “you’re either driving a message, or you’re getting run over by a Mack truck. Take your pick.”

The link to Wells’ substack blog is here. The paywall will cut you off at a certain point. Just shell out the $5 monthly, you won’t regret it.

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After several weeks of Meta and Google dictating the pace of politics of the Online News Act Bill C-18 by threatening and now (in Meta’s case) beginning to block news to Canadians, the federal government and the Canadian news industry are pushing back.

The federal government has paused advertising on Facebook and has been joined by major television and online journalism outlets. The Liberal Party is continuing to advertise on Facebook and is unlikely to unilaterally disarm without all-party participation which of course the Conservatives will not provide.

As for Heritage Minister Pablo Rodriguez, he’s now more engaged and fighting a two-front war. On one side he is lashing the Conservatives for their opportunism (see the tweet above) and on the other he is pursuing his own divide and conquer tactics by seeking a resolution with Google while isolating Meta politically. In a press conference in which Rodriguez was flanked by NDP and Bloc MPs, the Minister stated his optimism that the government can get a deal with Google.

This feels like the middle part of the battle over C-18. Rumours that Meta will implement a full news block in August seem plausible: it would arm the Conservatives with a wedge issue when Parliament resumes in September.

Largely unnoticed in the fray, the regular meeting of US and Canadian trade ministers on July 6th was notable in that no mention was made by either party to Bills C-11 or C-18, unlike previous meetings. Reading the tea leaves, this may suggest that the White House has not been won over by Californian studios and Big Tech companies who routinely try to leverage Canadian politics and regulation by threatening trade sanctions.

There was an intriguing message left dangling by US Trade Representative Katherine Tai’s post-meeting ‘read-out:’

Ambassador Tai underscored the need for Canada to fully meet its USMCA commitments, including on home shopping. In addition, she urged Canada to refrain from imposing a digital services tax while the OECD process continues this year.

This suggests the US is concerned about the looming January 1, 2024 implementation date for the Digital Services Tax which, it is widely assumed, will disappear if the US agrees to implement OECD recommendations for corporate tax on offshore companies. The DST is the prime policy alternative for the Liberals to impose an ‘audience tax’ on Big Tech companies seeking to escape Bill C-18. Did Canadian trade minister Mary Ng raise it at the meeting?

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MediaPolicy.ca has been tracking the CRTC applications by Canadian broadcasters to deregulate their obligations to broadcast local news. Steve Faguy has a good summary here. Two public interest groups, PIAC and FRPC, are pushing the CRTC to combine all of the applications into one proceeding.

This week MediaPolicy.ca drew attention to a hot CRTC file that has flown under the radar. Its the CRTC application by Global News and its 15 stations to access the $19 million Independent Local New Fund currently shared by 18 local stations that, like Global, are not owned by a Canadian cable company. These are the chickens coming home to roost for the CRTC which has neglected the local television file for years. No longer.

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The ‘$600 million’ federal aid to journalism programs that were introduced in the 2019 tax year are finally generating some Canada Revenue Agency data (pages 93 and 107). The five-year program has three envelopes: ‘QCJO’ journalist salary subsidies up to $15,000 per reporter, a reader subscription tax deductibility credit up to $75, and tax write-offs for charitable donations to journalism.

The programs are either under subscribed or were deliberately over budgeted. The salary subsidy was budgeted for $95 million annually, but is being drawn upon at $30 million per year. The subscription credit was earmarked for $40 million annually but is being used at the rate of $15 million. There are no numbers available for charitable donations (projected at $25 million) but I am guessing it’s very small given the short list of news organizations that registered for the program.

What was estimated to be a $120 million per year program is coming in at under $50 million. That compares to the $85 million ‘Aid to Publishers’ program available to paid circulation weeklies that has existed in one form or another since 1867. A publication cannot claim both ATP and QCJO.

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Back to C-18 and the general state of crisis in Canadian news journalism. I was fortunate to have a very useful Twitter dialogue (ah, so rare) with Jeff Elgie of Village Media when I barged into an exchange he was having with Barry Kiefl and Heidi Legg. The topic was how he has managed after a decade of hard work to turn his chain of digital community news sites into a viable business model. Elgie has been sharply critical of the Liberals over Bill C-18 because news throttling by the Big Tech twins could devastate his business.

There were two things I wanted to know about his entrepreneurial success. First, how reliant is he on government subsidies and his deals with Google and Facebook? Second, does he think his success in small market community publishing is transferrable to mid market and metropolitan news dailies? Here are his answers:

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July 6, 2023

Applications from Bell and Québecor to shed their license obligations to broadcast local television news have put the CRTC on the spot: for how many more years will the Commission ignore the unravelling of local TV?

The networks have been goaded into asking for license relief on local TV thanks to the CRTC’s one attentive moment to local TV in the last six years, its bizarre ruling in June 2022 to strike down the CBC’s local programming requirements in Canada’s seven biggest cities. Bell and Québecor want the same, even though the federal cabinet overturned the CBC ruling and told the Commissioners to rethink it.

However there is another local TV issue on the CRTC’s stovetop that the previous chair thought he could leave on the back burner. Now it is boiling over.

That issue is the recent application of the Corus-owned Global News for admission to the $19 million Independent Local News Fund (ILNF) that currently is distributed to 18 local television stations not owned by cable companies. The ILNF was created in 2017 by the CRTC, financed by contributions tithed from cable companies.

Now that the Shaw family has sold its telecommunications and cable TV properties to Rogers, its Corus operation has become an independent broadcaster and Global News is eligible for ILNF funding.

But the impact of admitting Global News’ fifteen stations to the Fund will be to swipe half of the $19 million for Global, leaving the remainder for the existing 18 stations. (There’s a chart at the bottom of this post, missing all sorts of caveats and explanations, that lists the stations, their market size, and local TV competition. Please e-mail corrections to Howard.law@bell.net.).

If Global News gains admission to the ILNF it can cancel out the $10 million in special news funding it lost on April 1st after it was cut loose from its former parent company Shaw Cable (the CRTC requires cable companies to spend 1.5 % of its revenues on either its community or local TV stations). Global’s annual news budget is about $130 million.

On the other hand, its fairly obvious that the 18 independent stations — calling themselves the Local Independent Television Stations (LITS) —get the short end of the stick. Global’s admission to the ILNF will result in the LITS stations losing half of their ILNF funding to broadcast the news. It was an eyebrow-raiser to learn from the LITS’ CRTC filing that their stations collectively spend $27 million on news. That means they are already 70% funded by the ILNF even before having their allocation cut in half by admitting Global to the fund.

The CRTC is entirely responsible for this mess that everyone saw coming. When considering the Rogers-Shaw merger application eighteen months ago, the Commission was warned about overwhelming the ILNF with twice as many animals drinking from the same waterhole. Its solution was to ignore the problem, or rather punt it. In three short paragraphs in the merger ruling, the CRTC confirmed Global would be eligible for the ILNF and that the Commission would, when it got around to it, reconsider the income stream that feeds the ILNF pool.

Unfortunately, the CRTC didn’t think to say anything helpful in those three paragraphs about synchronizing the admission of Global to the INLF and reappraising its financing. It also didn’t schedule the public proceeding to review ILNF funding, a review that will take a year to complete.

Global is eligible for the $10 million in ILNF funding now and wants it right away, having already lost the $10 million local TV funding from its cable parent in April.

The LITS stations point out that despite Global’s technical eligibility for the $10 million, the CRTC merger ruling has yet to give its formal permission to access the Fund.

The LITS stations say Global can afford a 10% hit to their news budget because of the Corus’ profitable specialty television channels, more than LITS can afford a 50% hit. The LITS stations also give Global’s owners, the Shaw family, a jab in the ribs by suggesting they are flush after cashing in on the merger. Not to be outdone, the Corus filings point out that five of the eighteen LITS stations have their own corporate sugar daddies with profitable media divisions that can cross-subsidize local stations, specifically Stingray (specialty channels) and Pattison (outdoor advertising).

The solution of course is for the Commission to hold a hearing immediately to sort this out and be prepared to work at high speed. There’s a little bit of slack: as a condition of approving the merger, the CRTC directed Rogers to pay the ILNF a $4.35 million lump sum. That could be used for about eight months of full ILNF funding to all LITS and Global stations.

But unless the Commission is prepared to let several of those LITS stations go dark —and I know some Heritage MPs who will make the Commission’s life miserable if that happens—- it needs to replenish the ILNF waterhole by the end of 2023 with an additional income stream. That money can only come from cable companies or some other source.

The Commission has to do all of this while the ground is shifting underneath its regulatory feet.

The Commission’s main proceeding for implementing Bill C-11, BNOC 2023-138, will be re-engineering the responsibilities of all broadcast undertakings, including licensed Canadian broadcasters and foreign online undertakings. Local news is part of that review. But as it stands, the local news file is not one of the issues scheduled for the first round of consultations that begin in November. The Commission isn’t scheduled to even consider local news until some time in 2024.

The other wild card is Bill C-18. In policy theory, that legislation should have no bearing on the ILNF: stations will finally get paid by Google and Facebook for their intellectual property, news content, and be able to hire more journalists. But the CRTC will likely want to take C-18 into account in assessing what is needed to keep these stations alive.

For years, the Commission’s approach to local TV news has been feckless. Now it’s time to be decisive and bold.

Let’s see if the Commissioners are up to it.

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Wade Oosterman and Lisa LaFlamme are centre, Michael Melling is on the far right. (Toronto Star Graphic).

July 2, 2023

Hello Canada Day weekend.

Our recommended read of the week is Kate Taylor’s reflection on why she believes in Canadian culture. There’s no flag waiving involved. I would say that she has read my mind on the topic but maybe that’s just an indication of how deeply her insights resonate.

That’s the good stuff. I’m afraid all of the news that follows is bad.

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It’s a measure of the media’s self-centred nature that nothing is more newsworthy to the newsmedia than breaking news about the newsmedia.

The turmoil of the last two weeks may justify that solipsism, what with the Bell Media layoffs, the television companies’ requests for deregulation, the announcement of Postmedia-Nordstar merger talks, and the dictats of US Big Tech.

My Twitter feed is running a firehose of comments on Google and Facebook’s point-of-no-return declarations that they will blackout Canadian news if Bill C-18 is proclaimed in force. As a consequence, the “I told you so” Twitter cadre is outdoing the “resist Big Tech intimidation” tweets by about ten to one.

In case you had any doubt, the MediaPolicy.ca view is that if we are going to defend our legislative sovereignty against Big Tech’s boycott tactics we should have a plan.

Another thing you can read on the C-18 crisis, foregoing the Twitter duel, is Hugh Stephens’ latest.

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Just when you thought bad news about Canadian media was due for a natural pause, don’t Postmedia and Nordstar announce talks about the long rumoured merger of our biggest newspaper chains. The Globe coverage is thorough and the Postmedia press release has the broad outlines of a potential deal.

Everyone in those two organizations is holding their breath. Here are some of the key details to watch for, if and when they emerge:

• editorial control, especially of the National Post and Toronto Star. We’re told there will be a moat around the Star, in a separate company controlled by Nordstar’s Jordan Bitove. What about the other Nordstar papers like the Hamilton Spectator: are they going to be pivoting right? Just out of curiosity, what will a new company do about election endorsements?

• on that point about control, the Postmedia press release said the two companies would share power, 50/50. Given that Mr. Bitove’s last 50/50 venture with Paul Rivett ended in commercial divorce, what’s the tie breaker going to be this time?

• whether ‘synergies’ will be cutting jobs or actually combining the best with the best. The Post and Star Parliamentary bureaus are stellar. Both papers have good business writers, just not enough of them. There are excellent investigative journalists on either side that could work together on big projects.

• what do Postmedia and Star spokespersons mean when they speak of ‘scale, efficiency and reach?’ We know what efficiency means. But do scale and reach mean anything truly significant for advertisers, digital subscriptions and algorithm-driven editorial content? The Globe and Mail has 300,000 digital subscriptions which makes them just about viable as a news organization. Will a merged Postmedia/Nordstar compare?

• what happens to home delivery? Margin for the print version is running on fumes, but it’s still there because Boomers who subscribe to newspapers are still here. Will a merger affect the remaining lifespan of print?

• the word is that the merger will swap debt for equity. The Globe says that Postmedia’s first-lien Canso Investments gets paid off. With whose cash? Will second-lien holder, the New Jersey headquartered Chatham Assets, get something in return for swapping all that debt for equity? And what kind of equity, voting or preferred? Who will hold the voting A shares? I mean, literally, their names.

• who will be on the Board? The Star’s Bitove is slotted for Chair, but what about the numerous Americans currently on the Postmedia board?

Overall, how much time and opportunity will a merger buy? When Postmedia bought Sun Media in 2015 the Postmedia chair Paul Godfrey said it would give both organizations ‘more runway.’ And to be fair, here we are in 2023 still on the tarmac, in one piece.

The thing about the runway metaphor, is that at some point the digital airplane has to take off or else there isn’t much to justify the loss of media diversity.

On that point, there are Competition Act considerations. Vass Bednar has a helpful piece here.

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Lately I observed that Bell Media’s asking the CRTC to abolish all license obligations for local news only days just after announcing 340 CTV layoffs displayed a hubris the company normally avoids.

Then within another few days, an anonymous source within Bell delivered to the Globe and Mail an audio recording of a meeting held last Fall by Bell Media President Wade Oosterman with then-Editorial VP Michael Melling and several CTV News managers.

In the meeting, Oosterman made some candid remarks about the dismissal of national news anchor Lisa LaFlamme (‘not fired for hair colour’) and asked for ‘balanced’ news coverage, questioning whether the CTV newsroom caters sufficiently to conservative viewers. According to the story source, he suggested LaFlamme was too soft on the federal Liberals.

On one hand, it’s not exactly unknown for a CEO running a news media business to express a desire to capture a bigger audience by shifting curation strategies (Conrad Black was known to say that he had ‘no wish to be severely aggravated by my own newspaper’). Except that’s normally done in the Editor-in-Chief’s office, not at a captive audience meeting with news managers.

Also, it’s way over the line for Oosterman to give specific instructions for more positive CTV coverage of BCE itself (this is not unrelated to one of his predecessors in the President’s chair childishly instructing the news room to ghost news stories involving the CRTC Chair).

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Three weeks ago I linked you to Ken Whyte’s column on the precarious situation of Indigo Books. Seems he was on the right track, unfortunately. The Globe reported on the book company’s $50 million loss and the reshuffling of its board. It’s a worrisome mess. What else is new.

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June 30, 2023

Let’s begin this post about US Big Tech setting a deadline to blackout Canadian news with an analogy.

It’s common at the beginning of a labour strike for both sides to dig in and dedicate themselves to showing resolve. No negotiations. No flinching. No weakness. The other side may cave next week. We aren’t at the end game yet.

You can see where I am going with this. The war of words over Bill C-18 between the federal government and the Silicon Valley giants Google and Facebook remains just that for now, words. The end game with real consequences appears to be some months away as we get closer to the implementation date of the legislation.

It’s getting real sooner than that for the six dailies in the CN2i group in Québec: Facebook says its not renewing their news compensation agreements when they expire later this month. Google just gave notice of non-renewal to The National Observer.

For the rest of Canadian news outlets, it’s living on nerves for the next few months. Almost all, even the financially secure Globe and Mail, have to figure out a Plan B for how a significant slice of their audience that accesses their news through Facebook is going to make the conscious effort to go to their news websites.

Maybe we should cave. After all, let’s consider Big Tech’s objectives in this impasse with our elected federal government, in order of how they would prefer to be governed:

1. Not governed at all. No more national precedents for government regulation.

2. If they must submit, an ‘opt-out’ of regulation on the condition they pay enough compensation to enough news organizations, of their choosing. There shall be no recourse for the news outlets not chosen by them. In Australia, they worked out the details in a closed door meeting with the Finance Minister.

3. Other than compensation, no other regulatory obligations: certainly not any obligation to treat news outlets equally or respect non-discrimination rules for the distribution of news content.

4. Limited liability, meaning the right price and a fixed price of compensation to news outlets, preferably very low. Unless they decide later not to renew those agreements.

Seem reasonable?

Now there are Canadian voices who didn’t like Bill C-18 in the first place and say we brought this on ourselves.

I say ‘we,’ not the Liberals, because just as a note-to-self the Liberals and the Conservatives campaigned on Bill C-18 less than two years ago. And it is supported by the Bloc and the NDP.

Now that the heat is on Canada, here’s Pierre Poilievre’s take:

The Liberals won’t stop until the only media you have access to is their propaganda arm in the CBC.

Meta and Google have now both announced Canadians will no longer have access to news on their platforms.

This is Trudeau’s Canada.

The Liberals are trying to pass a law that would funnel money into their preferred media outlets.

The result?

Media blackout.

Bill C-18 subsidizes big corporate media outlets while shoving new, innovative, and grassroots journalism by the wayside.

If Meta and Google won’t do it, the Liberals have said they’re just going to tack on more money to the big media outlets’ already massive subsidies.

Enough.

Pierre Poilievre and the Common Sense Conservatives will reject the woke agenda of the NDP-Liberal coalition, end the news blackout, and restore the promise of our great country.

We will put the Canadian people first.

Let’s Bring Home freedom of the press.

The final invocation is inspiring, coming from a political party that wants to, um, blackout the nation’s number one news site, CBC News.

I may be topping it the nob —-one of my favourite old fashioned expressions—- but now that everyone has clearly expressed their opinion on C-18 it may be time to back our elected government if only to support the principle that powerful foreign corporations don’t get to tell the Canadian electorate how to run our own country.

And while I am offering free advice, here’s the summer homework for the Liberals.

Come up with a Plan A for the end-game. The announcement this week of more government media subsidies, other than as a triage measure, is not an ideal solution. It’s time to move forward with the Digital Services Tax on the largest Big Tech companies, already on the books and ready to go.

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Meta’s Global Policy chief, Kevin Chan

June 24, 2023

A couple of years ago on a conference call, in an uncharacteristic moment of uncivil behaviour, I heckled Facebook’s global policy chief, Canada’s own Kevin Chan, by suggesting he worked for the digital equivalent of a tobacco company.

He seemed to take offence. So it’s possible I am responsible for the current mess with Bill C-18.

This week C-18 received Royal Assent and Facebook immediately renewed its threat to block Canadian news. 

The breathless news reporting of that threat may obscure the fact that the end-game in this confrontation over Bill C-18 could be several months away. Helpfully, press reports offered some new information: there have been direct talks between the Prime Minister’s Office and the Big Tech twins, Meta and Google.

After a career of negotiating collective agreements I have learned that press reports of negotiations are often gamed by the participants. I know I did my best. You have to take it all with a grain of salt.

What is Google and Facebook’s price of non-defiance? Do they have one, or is Canada a convenient punching bag for their global strategy to defeat regulation by sovereign governments, no matter what the contents of C-18? If that’s the case, it’s an easy choice for Canada to make between defending our sovereignty or capitulating to a private company. 

If press reports have it right (they may not through no fault of their own), what the web giants want is to pay off the Canadian news industry with a privately negotiated agreement and put C-18 into deep freeze; on the books but not implemented.

This is what Google and Facebook did in Australia and, two years later, they are making it clear that they aren’t keen on renewing those agreements.

Nobody ever stays bought in this business. 

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If clear and honest policy commentary counts for anything in this difficult environment, I highly recommend a recent podcast on Sean Speer’s The Hub with his guest Taylor Owen of McGill University. Owen talks informatively about Bills C-11, C-18 and the promised legislation on Online Safety.

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The focus on the policy goals of our Netflix Bill C-11 often overlooks what’s happening to the streaming industry in real time.

Ever since Netflix’s subscription growth stalled —-coinciding with other Hollywood studios and web giants jumping into direct-to-consumer video streaming—- the industry has been scaling back from the spending spree that normally fuels an all out battle for market share (you may recall that Disney recently announced a production pause in Canada, ascribed to Bill C-11 by Michael Geist and Senator Leo Housakos.)

In a rhapsodic narrative published in Vulture, Joseph Adalian and Lane Brown describe the industry retrenchment in apocalyptic terms. 

It’s difficult to know if this is just the expected dread of a market shake-out of winners and losers or if the streaming industry is discovering a similar fate previously revealed to the news industry, which is that monetizing content in digital is much harder than expected.

The article suggests there never was a streaming business model based on margin, only market share and stock price. Now there is a shake-out and a possibly a realignment of the business model. One aspect of that realignment may be rethinking the monetization arc of shows from first run to licensing and long term library revenue.

The article is thought provoking given its relevance to how we are going to make Canadian entertainment programming in this environment.

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Speaking of Bill C-11, let the implementation games begin.

Our Canadian broadcasters would have been delighted to read the Minister’s June 8th Policy Direction to the CRTC reminding everyone that, in the end, the financial contributions made by foreign streamers to Canadian content must measure up ‘equitably’ to those made by our broadcasters.

The broadcasters would like their current obligations slashed by up to a third and the streamers can meet them in the middle. MediaPolicy wrote about that here. Steve Faguy had a similar take here. Broadcast Dialogue did a straight news piece, here.

Another issue is the dry regulatory business of mapping out what digital services are in or out of regulation based on a media company’s threshold of annual earnings.

On one level, this consists of big media companies trying to save millions by carving their business, or parts of their business, out of the regulatory sphere. The CRTC will be inclined to agree to much of it, as including smaller digital services or those on the periphery of ‘broadcasting’ may sweep in more financial contributions but create unnecessary regulation.

However setting a bar for regulatory registration based on revenue thresholds has consequences for small Canadian programmers and the Canadian public. MediaPolicy covered that here.

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June 22, 2023

When the CRTC issued notices of public consultation for the implementation of Bill C-11 in three different files, it packed the big money issues into file ‘2023-138.’ That’s where it will fix a basic financial contribution for all online undertakings, equitable to those already made by licensed broadcasters.

For policy nerds and regulatory lawyers, the CRTC also opened file ‘2023-139’ on ‘registration’ of online undertakings, a colourless label for ‘which online media companies are too small to be regulated?’

The Commission asked everyone if there should be a $10 million threshold —referring to annual gross Canadian revenues earned by a domestic or foreign undertaking— below which a business would be exempted from registration and therefore from regulation.

Bids are coming in. Many are from media companies asking for the CRTC’s proposed $10 million to be raised so they can get under it. For example, the channel aggregator The Roku Channel wants to limbo under that bar.

The Independent Broadcasting Group of small Canadian programmers has filed the most interesting submission, pointing out that the CRTC seems to be creating an entry port not only for financial contributions to Canadian content but all regulatory issues.

The IBG’s most compelling point is that small programmers and online undertakings that fall well below a dollar-fixed registration requirement might be unable to take advantage of regulatory assistance, such as a complaint to the CRTC that they are being shut out from distribution from Roku or some other online platform. That’s would be a huge problem and C-11 observers will recall that a lot of legislative time was spent on securing access for small Canadian programmers to carriage on online platforms serving Canadian audiences.

Another registration-related issue is content regulation. Licensed broadcasters are subject to basic editorial codes in the Broadcasting Act’s 1986 television and radio regulations on ‘abusive comment’ and ‘equitable portrayal.’ Bill C-11 was drafted so that these regulations cannot be mapped over to social media platforms, but there is no jurisdictional bar to the CRTC creating something similar for streamers and other online platforms that control and curate their content.

What the CRTC may choose to do is an issue provoked earlier this year when Égale Canada filed a TV regulation complaint to the CRTC asking for Fox News to be kicked off of Canadian cable TV.

The merits of the case aside, this scenario will also arise online. The CRTC will have to figure out how and whether to apply the abusive comment TV regulation to online undertakings that broadcast to Canadians. It’s straightforward in the cable world: the CRTC can order the cable platforms to defenestrate the offending channel (as it did in the case of Russia Today). It’s more complex in an open Internet.

The reason this is all relevant to registration is that there will be small online undertakings making themselves available in Canada who would like nothing more than to test the boundaries of regulating ‘awful but lawful’ content. If they aren’t registered, they may not be accountable.

Another angle on this issue is that Bell and Corus have both asked the CRTC to exempt online news undertakings in their entirety. Fox News is an online undertaking too.

So the issue for the CRTC will be whether they will make sure that exemption from ‘registration’ is not an automatic exemption from all regulation.

Finally, one other issue that bubbled up in the submissions to the CRTC from foreign online undertakings. Far from humbly accepting their ‘win’ in the Heritage Minister’s direction to exclude social media creators and their programs from regulation, TikTok Canada wants its entire platform excluded from regulation even if they host media company content (or their own). Not even Meta or YouTube asked for that.

These observations are only from the first round of written submissions on ‘139’ registration issues. Experienced CRTC players normally hold back their most interesting comments for the rebuttal round of submissions, due June 27th. We’ll see what pops up.

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June 21, 2023

Last week’s Bell announcement of 1300 job cuts and closings of six AM-radio station woke up a lot of people who may have acclimatized themselves to the steady drip-drip of television layoffs over the last ten years. The number of bodies headed out the door in Bell Media CTV is — a guesstimate— around 340. There is no fudging the impact of a six per cent staffing reduction on productivity and programming .

So naturally Bell chose last week as the right time to file an application to the CRTC asking to eliminate their twin regulatory requirements for weekly hours of local news on its 35 CTV stations and the minimum news spending to support them.

But no worries, Bell’s application says it will be fine, it’s really they just don’t like being told where to allocate their budgets:

Bell Media’s local television stations have always been committed to ensuring the coverage of such stories and if our Application is approved, we will continue to do so.  Having the flexibility on how to achieve those goals rather than Commission mandated rules will allow us to provide a better news service to the local communities that we serve. 

There is something much bigger going on here.

Bell simultaneously filed CRTC papers asking for reductions in all other television commitments to Canadian programming. It asked for a reduction in its Canadian Programming Expenditures (CPE) —which includes spending on local news and entertainment— from 30% of revenues to 20%. It also wants to reduce its obligations to air shows in the prestige (and expensive) categories of dramas, comedy, documentaries and award shows, this time from 7.5% to 5% (this spending on ‘Programs of National Interest’ (PNI) is an envelope within the larger CPE budget, as is the 11% spending envelope for local news).

And for good measure, Bell wants to reduce its cable division’s contributions to the Canada Media Fund and local news from 5% of annual revenue to 4%.

Guess what, Corus wants something very similar. Back in November 2022 the Shaw family-owned broadcaster quietly filed a request to have its CPE reduced from 30% to 25% and its PNI from 8.5% to 5%. The Commission hasn’t scheduled a hearing yet.

Wait, not done yet. This month Québecor filed CRTC papers asking to cut its TVA local news programming in the Quebec City region and —before the CRTC could do so much as establish a file number— cut its weekend shows as a cheeky fait accompli. Rebuked by the CRTC, Québecor CEO P.K. Pélédeau reinstated the programming and announced layoffs instead.

Here’s how this all fits together.

Now that Bill C-11 is law, the CRTC has begun a lengthy public consultation on a long list of regulatory issues flowing from the new legislation.

Two issues entwined helix-like are what Netflix and the foreign streamers are going to pay into the financing of Canadian programming and how that will be ‘equitable’ to what licensed Canadian broadcasters are already doing with their CPE, PNI and spending on local news. That ‘equitability’ is at the heart of C-11. At the moment, the streamers pay nothing. So the gap is, well, 30% or so.

The ‘30% of revenue’ figure understates the pride of place for Canadian content in programming budgets. In 2021, the ratio of broadcasters’ expenditures on Canadian programming compared to acquisitions of foreign programming was $1.95 billion to $1.35 billion for private broadcasters and $638 million to $25 million for CBC-Radio Canada which has an 85% CPE. Overall, those programming expenditures favour Canadian programming at a rate of two to one. 

By now, you’ve figured it out what’s happening here. The Canadian broadcasters want the gap between them and the streamers closed from both ends, including a reduction of their own spending commitments. Hence, their CRTC applications noted above.

As tales of woe go, the broadcasters have a good one and the fair minded cannot disagree.

Here’s some industry context to demonstrate it.

The CRTC’s tracking of local news dollars falls in the ‘conventional television’ bucket, meaning local stations that are stand-alone or belong to the major networks. Conventional TV has been in the red every year since 2012, usually in double-figure percentages.

For the network stations like CTV, Global, City or TVA, their operations have always been directly cross-subsidized by their profitable ‘specialty’ TV channels and indirectly by their cable operations.

That specialty TV profit margin hasn’t declined too much since 2013 in percentage terms (steady at approximately 25% operating profit) but the revenue has declined 25% from $5.2 billion to $4 billion. As you can’t eat margin, only dollars, there is less profit available to cross subsidize programming that loses money: chiefly, PNI and local news. And that specialty TV blood bag is getting drained by the rising costs of acquiring the cheap US programming that audiences demand.

Bell, Corus and Québecor —we haven’t heard from Rogers as yet— say they can’t wait for the Bill C-11 hearings to result in lower regulatory obligations (presumptuous, yes). They want relief now, and so their applications are for mid-term license relief (to be fair, their five-year licenses expired in 2022 but have been extended twice by the CRTC until August 31, 2024).

Besides wanting to pay less, both Bell and Corus have something more structural in mind and of central importance to how we have always financed Canadian content. They want to shift their mandatory PNI spending to popular genres like lifestyle and reality TV where they think they can make money and not lose money competing head-on with the dramas streamed by Netflix, Disney and Amazon.

But reducing PNI has a knock-on effect upon the independent Canadian producers who make the bulk of Canadian television dramas.

More to come.

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