MediaPolicy.ca

August 6, 2023

Last week MediaPolicy posted two columns. 

The first was co-written with Toronto Metropolitan University’s Ivor Shapiro and appeared on the IRPP website. It is a continuation of the policy discussion on a national news strategy that was kicked off in June by Peter Menzies and Konrad von Finckenstein.

The contribution from Ivor and myself is to build on the Menzies/KVF idea that the CBC is the foundation of any strategy countering the market failure of news journalism. And the four of us agree that we have to get back to a place where there is a truly “private” private-sector news industry that co-exists with the publicly funded CBC. The question is how to get there and the disagreement I would suggest is what we are willing to risk —given the existential requirement of news journalism in our democracy— to get there.

In practical terms, Ivor and I have added two essential elements to this work-in-progress: prioritizing news gathering in state support for journalism and reinforcing its political legitimacy with far more transparency in its administrative governance. My own pet idea is a constituent assembly that elects a board of directors to oversee the administration of public subsidies and incentives.

The other MediaPolicy post turns back to Bill C-11 with a summary of ‘What Hollywood Wants.’ It’s a review of the Motion Picture Association’s written submissions to the CRTC regarding how the US studios and streamers should contribute to Canadian content under the new legislation.

Related to that post, Johanna Schneller has an analysis piece in the Globe suggesting that lately Hollywood has been making a bad bet on high-budget thrillers. I’m not convinced of that without the full monetization numbers for those movies, especially the foreign box office receipts which are typically two-thirds of the take.

In any event, Schneller isn’t entirely hyperbolic when she says that the Hollywood streaming platforms “are bankrupting their studios to keep up” with each other. Only Netflix makes money and one feels that either cost retrenchment or a culling of the streamer herd is only a matter of time.

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If you are looking for some good reading, here are some suggestions.

Sean Speer has co-written a brief column with Pierre Poilievre’s communications director Ben Woodfinden describing the political ideology of Canada’s first Prime Minister Sir John A. Macdonald’s as a hybrid of nineteenth-century conservativism and classical liberalism.

That’s not a contentious point but what is interesting is they latch on to the idea of “state capacity” conservativism which they describe, in its circa 1867 context, as nation building under the shadow of the American juggernaut to the south.

Their line of argument could easily apply to cultural regulation in this modern era —it certainly did in Brian Mulroney’s Conservative Party— though no doubt Speer and Woodfinden would say times are different now. Speer has suggested Bill C-11 is the “hidden agenda” of Quebec cultural nationalists and Woodfinden’s boss wants to repeal it.

More bingeing on Speer, he has an excellent podcast (24 minutes) with David Frum exploring the phenomenon of young conservative men “falling down a far-Right path” or as Frum puts it “young conservatives and the fascist temptation.” (My contemporary, Frum made me chuckle by describing left-wingers of the 1970s and 1980s as “emotional.”)

This follows a Speer column I linked to last week which positions Pierre Poilievre as a libertarian conservative competing for the soul of Canada’s conservative movement with ‘nationalist’ conservatives.

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August 4, 2023

Reading CRTC regulatory filings can be an eye-rolling experience. Almost without exception, the written submission from each industry player is self-serving and chock full of cherry picked quotations and wildly overstated arguments. And this is just in their initial submissions. The reply filings commenting on each other’s views are even more fun.

The Motion Picture Association of America (MPAA) represents the Hollywood studios and streamers —Netflix, Disney, Paramount, Warner Discovery, NBC Universal et al— collectively, the new 900-pound gorilla in the CRTC regulated system. 

The MPAA’s first bid on regulatory obligations filed in early July went something like this:

• MPAA opposes the Commission’s proposal to levy an ‘initial base contribution,’ in cash, from all foreign and Canadian broadcasters to feed the various television funds that underwrite Canadian TV production. The MPAA wants to limit the streamers’ CanCon obligations entirely to making their own Canadian shows, known in CRTC vocabulary as “Canadian Programming Expenditures” that normally amount to 30% of annual revenue (and translate into a higher percentage of programming budgets). 

• The MPAA proposal means no mandatory cash contributions from Hollywood streamers to news funds, Indigenous content production, or any other media funds that Canadian cable companies (but not TV networks or channels) have always sponsored through a tithe set at five per cent of annual revenue. In fact, the MPAA (and all of the other streamers) are ignoring the Commission’s requirement to table a number.

• The MPAA says that the streamers’ Canadian shows should be certified under a new definition of Canadian content that relies less on the participation of Canadian producers and creative talent and more on Hollywood writers and actors (to wit, the much-touted British model for certifying home-grown video content permits the use of an All-American cast and key creative talent provided the show is ultra-British in its story and setting).

As for the CRTC process, the MPAA and all foreign online undertakings participating for the first time in Canadian regulatory hearings object to the Commission determining an ‘initial base contribution’ before moving on in a second phase of hearings to consider Canadian programming expenditures and a review of the definition of Canadian content. The MPAA says the CRTC is putting the cart before the horse and this is prejudicial to the streamers’ regulatory presentations.

There certainly are common sense reasons for the CRTC to have considered all three big regulatory pieces at the same time, but it appears Chair Vicky Eatrides is eager to get some US money into Canadian media funds quickly and that in the long term a sustainable flow of cash contributions has to come from broadcasting undertakings whose business models are on the rise (the US streamers) and in decline (Canadian legacy broadcasters).

The MPAA is so disgruntled by Eatrides’ approach that it is already threatening court action if it doesn’t like the outcome of the hearings: it cites a rather weak administrative law argument about procedural fairness.

And all of this was before MPAA Canadian director Wendy Noss got a peek at rival submissions filed simultaneously by Canadian broadcasters. Two weeks later, her reply submissions to the CRTC filed are so ferocious you imagine you can see the veins bulging in her forehead.

The Canadian broadcasters, as this space has observed previously, want to lower their regulatory obligations to sponsor media funds and make Canadian shows while raising matching obligations on the US streamers from zero to parity with Canadian competitors. They fix this ‘meet you in the middle’ figure at 20 % of annual revenues and provide a handy bar graph demonstrating that the entire CanCon system will be flush with cash from both foreign and domestic broadcasters.

Bell proposal for a harmonized 20% CanCon contribution from US streamers & Canadian broadcasters.

But there is a twist to this harmonization. The Canadian broadcasters want the US streamers to contribute their 20% entirely in cash contributions (before even discussing programming expenditures on their own Canadian shows).

Cue the vein popping and some truly provocative arguments from the MPAA.

The first pitch Noss makes on behalf of Hollywood is that when Bill C-11 says that US streamers must contribute ‘equitably’ to Canadian content, it really means ‘contribute less than Canadian competitors.’ 

This is bunk of the highest order but, to summarize, she has misconstrued the notorious section 3(1)(f) of the new Broadcasting Act that grants US streamers some yet to be defined flexibility in using American talent as authority for the proposition that Hollywood’s overall level of contributions should be less than Canadian contributions. 

Then there is her slap down of the Canadian Media Producers Association which had the temerity to tell the CRTC that under the new regime independent Canadian producers should retain intellectual property in the ‘CanCon’ shows they make and then license to broadcasters and streamers.

The control of long-term commercial exploitation of Canadian shows is important to the CMPA whose members earn a lot of money making shows for the US audience on a ‘turn-key’ contract arrangement with the streamers but want to keep growing the base of their original business, which is making Canadian shows for the Canadian market.

Noss cuffs the CMPA around for being ungrateful for the Hollywood patronage and then, in the coup de grâce, claims that Hollywood already makes ‘more genuine’ Canadian content than Canadian producers:

43. We note that while many members of the CMPA have benefitted from the contributions that have been made over the years by foreign streaming services and studios, the CMPA now argues that the Commission’s new contribution framework must distinguish between the domestic production industry and foreign service production based on a theory of cultural and competition policy versus industrial policy. We believe this theory is without merit. If a production is advancing the broadcasting policy objectives of the Act — with respect to use of Canadian creative and human resources; the telling of Canadian stories; displaying Canadian talent; encouraging the development and export of Canadian programs globally; serving the needs and interests of all Canadians; reflecting and being responsive to the preferences and interests of various audiences (among others) — we fail to see how that production is not advancing cultural policy. As set out in the individual submissions filed by Disney, Netflix and Paramount, oftentimes so-called “service productions” tell more genuinely Canadian stories that showcase Canadian storytellers, talent, culture and geography than domestic “Canadian content.” 

Ouch. Can’t wait for the return volley.

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By Howard Law and Ivor Shapiro

July 31, 2023

The path toward a consensus strategy to bolster news journalism took a few new twists in Canada’s smoke-filled early weeks of summer, 2023.  

The federal parliament passed the Online News Act, a.k.a. Bill C-18, and its chief targets, Meta and Google, promised news-throttling countermeasures. Bell Media, owner of the country’s biggest private TV network, cut 340 jobs and then asked the CRTC for relief from all license conditions for local news.  Meanwhile, the two biggest online journalism companies in Canada – Postmedia and NordStar – announced merger negotiations (only three years after their “swap and close” deal shuttered 44 local publications) and then halted talks citing, amongst other things, “regulatory and financial uncertainty.”. 

Into this conflagration of reminders of Canadian journalism’s sustainability crisis came an ambitious proposal for a national news strategy from respected conservative voices Konrad von Finckenstein and Peter Menzies, published June 7^th by the Macdonald Laurier Institute…

Please continue reading in English or French at Policy Options, the Institute for Research on Public Policy.

July 31, 2023

The American equivalent of Canada’s Online News Act Bill C-18 has been stalled in US Congress for two years and a new Bill, the “Community News and Small Business Support Act,” has been tabled in the House of Representatives.

The C-18 type legislation, Senator Amy Klobuchar’s Journalism Competition and Preservation Act, almost made it into law last year, fell off the order table, and was relaunched in the Senate Judiciary Committee in June.

However this new House effort, goes in a different direction from C-18 styled legislation and instead is a do-over of another unsuccessful Congressional Bill from 2021 . It relies on two major tools. The first is an advertiser subsidy: small businesses would get significant reimbursements for patronizing newspapers. The second is a federal wage subsidy for journalists (sound familiar?). It is co-sponsored in the House by a Democrat and Republican.

One should never be a pessimist, but getting a Bill like that past Kevin McCarthy, Marjorie Taylor Greene, and the Republican caucus in the House seems challenging.

Bringing this back to Canada, this page noted in June that Konrad von Finckenstein and Peter Menzies have proposed a news journalism strategy. It was recently reviewed by the University of Calgary’s Gregory Taylor. Today there is a continuation of the policy discussion posted by the Institute for Research on Public Policy, co-written by Ivor Shapiro, Senior Fellow at TMU’s Centre for Free Expression, and myself.

We are hoping the discussion continues, not so much as a back and forth argument but as something more like a chain-novel.

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Another Canadian media policy in the news is our Digital Services Tax that is scheduled to be implemented at the end of the year. The three per cent corporate revenue tax on digital media companies is part of a drawn out international effort to do something about Big Tech’s notorious offshore tax avoidance.

France and the UK have already implemented their DSTs. Canada and other countries agreed not to implement their DSTs so long as the Biden White House was trying to get the aforementioned McCarthy and Greene to play ball and replace the DST with a different tax regime that sees the Californian Big Tech companies pay corporate taxes in the jurisdictions their services are used, in proportion to local consumption.

The agreed upon deadline of December 31, 2023 is approaching and the US administration got most other countries but not Canada to waive the deadline and wait to see what happens in a deadlocked US Congress in 2024, reliably reported as an election year.

When Finance Minister Chrystia Freeland said no to a Canadian extension, the US ambassador to Canada dutifully threatened trade sanctions against Canada without specifying how the DST —which the US agreed is the default to their legislative inaction—is a trade violation. Some months ago Michael Geist published a blog making the same claim about trade law by quoting chapters of the CUSMA trade deal without saying how they applied.

The Globe and Mail editorial page chimed in this past weekend saying Canada should take no legislative action against Big Tech without global co-operation because we can’t take the retaliation. In characterizing Canadian policy efforts, the Globe suggests that the Online Streaming Act Bill C-11 and the Online News Act C-18 “force tech companies to compensate Canadian media for disrupting their business models,” statements that are arguably wrong (C-18) and clearly incorrect (C-11).

Instead the Globe says we should pursue data privacy legislation (we are, it could be more ambitious) and put more teeth in our Competition Act so that our regulator is as well equipped as its American federal and state counterparts that are waging a decade-long court battle against Big Tech market power (while doing nothing in US Congress).

The Conservatives, who made the DST the centrepiece of their election policy as an alternative to Bill C-11, have no comment.

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The recent shuffle in the Trudeau cabinet resulted in Pablo Rodriguez rotated out of Heritage and replaced by Pascale St.-Onge.

The waggish Paul Wells had this to say:

Pablo Rodriguez to Transport would seem to be yet another case of ministerial burnout on all those Web Giant-Killer bills that have become the torment of a succession of Heritage ministers. Pascale St.-Onge replaces him on the censorship ‘n’ subsidies beat, ringing a new variation on the eternal question: Why do they call it Canadian Heritage if only ministers from Quebec are allowed to do the job?

The “censorship ‘n’ subsidies” tag is a bit of a giveaway Paul, but I laughed.

On the other hand, Geist had this to say: “Pascale St.-Onge, the new Heritage Minister, was a lobbyist in the culture sector before her election to the House of Commons and is likely to welcome the big tech battle.”

Well if she’s a “lobbyist” she is in good company, although in fact she was an advocate representing Québécois journalists and media workers, having worked at La Presse for fifteen years and another ten at the FNC union. That probably makes her the most policy-wise Heritage Minister to ever assume the role.

St.-Onge wasn’t in the job a day before she signalled the government is going to stay the course on C-18. The full Facebook news throttle is rumoured to take place imminently.

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The CRTC keeps posting the blizzard of legal filings in its public proceeding to implement Bill C-11. The US streamers are miffed that CRTC Chair Vicky Eatrides chose, in their view, to put the horse before the cart by starting off with a consideration of a ‘basic initial contribution’ from the streamers into the various television and radio subsidy funds that legacy broadcasters currently finance.

The streamers, surprise, don’t want to pay anything (and collectively refused to submit a proposed contribution) on the grounds that the Commission should first decide if it is going to amend the 40-year definition of a ‘Canadian’ video program. That’s because the Hollywood streamers prefer to deliver their support for Canadian programming entirely as programs available on their own platforms —preferably with new CanCon rules more favourable to them— instead of sharing part of their contribution in a common pool of subsidies.

On the music side of the industry, the Globe reported that Spotify is repeating its previous warnings to the Commission that too much regulatory interference with their distribution model in the name of discoverability of Canadian songs might turn off consumers to the point that they resort to VPNs or pirated music.

Spotify probably doesn’t have to worry. Eatrides’ public notice of consultation already grants the streamers the opportunity to self-design their efforts to promote Canadian content, see paragraphs 77-81 of the Notice.

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Here’s a recommended read, The Hub’s Sean Speer on which way the Canadian conservative movement might jump: “The conservative consensus is over. The consequences for the Canadian Right will be profound.”

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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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If you would like regular notifications of future posts from MediaPolicy.ca you can follow this site by signing up under the Follow button in the bottom right corner of the home page; 

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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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If you would like regular notifications of future posts from MediaPolicy.ca you can follow this site by signing up under the Follow button in the bottom right corner of the home page; 

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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.

***

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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