This was not a feel-good week for Canadian news media.
BCE’s announcement of 1300 layoffs, or three per cent of its workforce, across its telecommunications and media businesses shook people up. The Bell Media division will shed approximately 340 jobs.
It wasn’t just the big number, it was also the elimination of CTV’s foreign bureaus and its veteran journalists who are households names. Bell closed six AM radio stations in Vancouver, Edmonton, Calgary, Winnipeg and London Ontario which only makes you wonder if FM stations and small town television stations are next in line.
Andrew MacDougall was prompted to write a dirge for the news industry in the Ottawa Citizen, a column I have written in my own head too often.
For those of us who have been dwelling on little else for the last ten years (coinciding with ten years of significant annual losses in local television and the hollowing out of newspaper advertising revenue), these layoffs were just another big bump in a bad road. The only silver lining in this cloud is the bump jolted more people awake.
Yes, it’s Bell’s fault. Bell should always suck it up.
That was the general tenor of social media posts I observed all week: that Bell was whining and blaming its regulatory load. Actually the corporate commentary included very little of that. Here’s CEO Mirko Bibic’s note to staff:
The ‘blame Bell’ distraction even went so far that a Toronto Star story noted that Bell Media made $52 million last year across its profitable specialty news channels CTV News, BNN and CP24. In fact, Bibic reported that CTV’s overall news operation —adding in its 35 local television channels and many radio stations— lost $40 million last year. Those numbers are consistent with published CRTC data.
And we haven’t even begun to talk about Corus’ Global News, the nation’s second largest private television chain at 15 stations across the country. They no longer have the luxury of being owned by a cable parent company with healthy profit margins (although it’s allowed them to make the transition to its StackTV streaming service more quickly). The finances at Global are even worse than CTV and there’s the matter of the CRTC’s unkept promise to review the funding of the $20 million Independent Local News Fund that is meant to support independents like Global.
The timing of Bell’s announcement was cynical of course. It came a day after the Online News Act Bill C-18 was approved with amendments in the Senate. The layoffs also set the table for the CRTC’s regulatory hearings to implement Bill C-11 in which the Commission will consider the regulatory load of all broadcasters. Québecor, Corus and Bell have all applied to the CRTC for relief from CanCon spending obligations even though their licenses have a year to run. Québecor’s ownership especially distinguished themselves by cutting the programming before the CRTC even held a hearing. Stay tuned on that one.
If this wasn’t a sufficiently discouraging situation for news media, this week Reuters published its 11th annual global report on news consumption and trust. The Canadian segment revealed big drops in both consumption and trust.
The overall global trend suggested a strong pivot of Gen Z (those born after the year 2000) to getting their news from social media services (that isn’t reported as occurring yet in the US or Canada). This lead one commentator to conclude that in the long run news organizations won’t control their own distribution platforms at all. That kind of trend sounds familiar —think broadcasting convergence circa 2000— and opens up a under discussed future scenario in which Big Tech companies seek to own the strongest brands in news.
Here’s the Reuters report, the two-page segment on Canada is at page 114. The US summary is at page 108:
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By now you may have read press reports of the Federal Court of Appeal overturning the CRTC’s censure of CBC-Radio Canada for two of its Montréal radio hosts saying the ‘n-word’ over the air.
The controversy began a year ago when the CRTC ordered the CBC to apologize on behalf of its journalists and put them through diversity training after the hosts repeated the full ‘mot d’n’ four times in a six-minute segment about Concordia students objecting to their professor speaking aloud the book title of the Pierre Vallières 1968 indépendantiste classic “N—— blancs d’ Amérique.”
CBC Head Office in Toronto responded with the mandatory apology.
But the CRTC’s rebuke of Radio-Canada and its journalists resulted in a powerful backlash of public opinion in Québec. An outcry demanding CBC appeal the CRTC ruling struck home and the case was sent to the Federal Court of Appeal. In December the federal Attorney-General —representing the CRTC as agent of the Crown—- volunteered its legal surrender and invited the Court to overturn the Commission.
MediaPolicy commented on the story here, here and here.
The Attorney-General offering his sword was an admission that the legal reasoning behind the ruling was sub-standard.
The complaint from a Black Montréalais wasn’t without merit. In fact the CRTC probably had a valid point that no matter how well intentioned the radio hosts’ desire to convene a public discussion over censorship and racism they ought to have kicked off the show with a disclaimer giving context to the reasons for identifying the book by its full title including the racial insult.
However the Commission squeezing a forced apology out of Radio-Canada on behalf of its professional journalists was an enormous misjudgment. (Forced apologies are usually a poor investment, just ask the Toronto Blue Jays).
Legally, the Commission’s majority ruling from three of five commissioners just botched it.
Inexplicably, they ignored their well known 1986 Radio Regulations —written right into the CBC’s license conditions—-that provide a legal test of ‘abusive comment.’ The regulation says that offensive language may be acceptable for purposes of artistic expression, satire or journalist analysis.
For reasons best known to themselves, the majority commissioners built their case on three ‘policy objectives’ in section 3(1) of the Broadcasting Act touting the importance of diverse and multi-cultural programming and also the section mandating that all programming on radio and TV ought to be “of a high standard.”
The latter policy objective in section 3(1)(g) of the Act authorized the Commission to pass the aforementioned code on abusive comment in its Radio Regulations forty years ago. In citing general objectives of the Act —instead of the Radio Regulations and its considerations of free expression and context— the commissioners compounded their error by ignoring other policy objectives in the Act which defended journalistic free expression. To cap it off, the Commission did not consider freedom of expression under the Charter of Rights and Freedoms.
It was a legal cluster-nut and ripe for appeal.
At this point, the Attorney-General stepped in to spare the Commission the humiliation of the Court’s inevitable smackdown. As the Commission’s legal representative, the A-G filed a brief to the Court asking for the Commission to be overturned.
You would think the Commission would listen to its friend the A-G and —as you might be told after getting knocked out in a bar fight—- ‘stay down.’
Nope.
The Commission asked the Court to be allowed to defend itself if the A-G wouldn’t. The Chief Justice denied the request but then took the unusual step of appointing University of Ottawa law professor Paul Daly as a ‘friend of the court’ to make the best case he could for the Commission.
This is where we get into some serious legal nerdship that is important beyond the immediate importance of how the CRTC navigates freedom of expression and harmful content. It goes to how the Commission interprets its powers and jurisdiction under the Broadcasting Act in any number of situations.
The fatal flaw in the Commission’s N-Word ruling was that it did not levy sanctions on Radio-Canada on the basis of the Radio Regulations which were lawfully enacted under the head of powers in section 10 of the Broadcasting Act authorizing the Commission to pass regulations aligned with the policy objectives of the Act found in sections 3 and 5. In effect, the Commission moved directly from policy considerations to sanctions without applying its regulations (which provided a proscription against abusive comment but also mitigating factors such as journalistic activity).
The law professor argued before the Court that the Commission remained in bounds because of the wording of Section 5 of the Act, seizing upon the Commission’s authority to both “regulate and supervise” broadcasting. He suggested this meant that the Commission was “supervising” when it sanctioned Radio-Canada and therefore wasn’t obliged to follow “regulations.”
Yes, you could drive a dumpster truck through the hole that legal argument makes.
To make a long story a little shorter, Chief Justice Marc Noël wasn’t buying it. If you are interested in the legal play-by-play, you can read it for yourself in paragraphs 42 to 61 of the Court decision.
The reason it’s an important ruling, and not just angels dancing on a pinhead, is readily apparent if you read the motherhood policy objectives in section 3 of the Act next to the specifics of CRTC regulations that tell broadcasters what they can and cannot do.
Could the Radio-Canada journalists have defended themselves from the charge of abusive comment under the Radio Regulations? They never got that chance.
The Chief Justice has ordered the Commission to go back to square one and apply the Radio Regulations.
A word of advice to the Commission: stay down.
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Heritage Minister Pablo Rodriguez has Gazetted his draft Policy Direction intended to guide the CRTC in its implementation of key regulatory issues within our spanking new Broadcasting Act, as amended by Bill C-11.
MediaPolicy.ca posted some highlights. It’s no surprise that YouTubers and algorithms top the list.
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The best read of the week is from Ken Whyte, if only because anything the lad writes sounds like he was born speaking in iambic pentameter.
Whyte has written more than once about Indigo Books, owned by Heather Reisman and Gerry Schwartz, and offers his insights on whether things are about to change.
The other read of the week is a policy piece advocating for a national news strategy for Canada. Co-written by two ex-Commissioners of the CRTRC, former Chair Konrad von Finckenstein and Peter Menzies, it’s a thoughtful manifesto worth the thirty minutes of your time.
The authors invite a continuation of the dialogue and MediaPolicy.ca hopes to take them up on it soon.
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As for our current dogfight between the federal government and Big Tech over the Online News Act Bill C-18, we appear to be stuck in the ‘no, f**k you‘ phase as the government’s anger over Meta and Google tactics is now being voiced in defiance by the Prime Minister (see the video above).
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The back and forth about Canadian mobility prices —well its more like a Punch and Judy show— rests on the bedrock assumption that monthly bills are not internationally competitive. It seems to be orthodoxy now that the Heritage Committee, CRTC, Competition Bureau and ISED Minister Champagne have endorsed it. Because after all, who believes the telcos saying it isn’t so?
For the skeptical mind, have a read of Mark Goldberg’s latest post.
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Policy directions can be maddingly vague. This is deliberate and mostly a reflection of the Broadcasting Act’s restrictions on the federal government giving specific instructions to the independent regulator. It means we have to heavily parse every word and read between the lines.
Here are highlights of some of the more contentious issues:
YouTubers
The Minister has fulfilled his promise —previously made both verbally and in writing— to forbear from regulating videos and music uploaded by YouTubers. That means the CRTC cannot impose ‘discoverability’ regulations affecting the search rankings of those programs.
The legalese is that YouTubers are defined in the Policy Direction as ‘social media creators’ which ‘means a person who creates programs that are primarily intended for online distribution as user uploaded programs through social media services.’
As for YouTubers’ video and music, section 4(2) of the Act excludes that content from the CRTC’s jurisdiction unless they are specifically included by a CRTC-made regulation. The Minister has directed the CRTC to regulate only “in respect of programs that have been broadcast, in whole or in significant part, by a broadcasting undertaking that is required to be carried on under a licence or that is required to be registered with the Commission but does not provide a social media service.”
Translated, that means the only way that third party uploads to YouTube or TikTok can be regulated for discoverability is if the content already appears on other regulated platforms such as television, radio and online services such as Netflix, Crave, Roku or StackTV. (YouTube’s own proprietary music service, YouTubeMusic, is not a third party upload and therefore is subject to regulation).
Algorithms
Consistent with his testimony before Parliamentary committees, the Minister has directed the CRTC to focus on ‘outcomes’ when devising discoverability regulations in support of showcasing Canadian content.
This is code for giving online broadcasters free reign in how they choose to promote Canadian content. The prospect of the CRTC ordering online undertakings to improve their ‘outcomes’ by manipulating their algorithm-based content rankings appears to be described as a last resort:
Discoverability and showcasing – The Commission is directed to consider both established and emerging means of discoverability and showcasing to promote a wide range of Canadian programming. In making regulations or imposing conditions in respect ofdiscoverability and showcasing requirements, the Commission is directed to prioritize outcome-based regulations and conditions that minimize the need for broadcasting undertakings to make changes to their computer algorithms that impact the presentation of programs.
This does raise the possibility that online undertakings can minimize their ‘discoverability outcomes’ by maximizing the acquisition of Canadian content instead. The CRTC left that route open in its recent notice of public consultation on the implementation of C-11.
The Definition of Canadian Programming
The Minister has made statements over the last two years in which he seemed receptive to revising the 40-year-old point system defining a Canadian program for the purpose of subsidies and regulation. The new legislative text in section 10 (1.1) of Bill C-11 did not drive any particular change.
The contentious issues are twofold. The current headcount-method (what counts is the nationality of producers, talent and crews) does not give credit for identifiable national themes in the content. Secondly, the current requirement that Canadian producers retain the intellectual property rights in the Canadian programs they sell to broadcasters is opposed by Netflix and the US streamers.
The Minister’s Policy Direction gives few hints and no discernible direction to the CRTC on how to handle these issues other than a subject heading in a backgrounder which instructs the CRTC to ‘redefine’ Canadian programs without saying how.
Level Playing Field
The main reason for legislating Bill C-11 was to require Netflix and the other foreign broadcasters to pull their weight in financing and promoting Canadian programming in comparison to the expectations on Canadian broadcasters.
The Act was a little mushy on this point, requiring in section 3(1)(a.1) that the US contributions have to be ‘appropriate.’ The government rejected an amendment proposed by Bell to upgrade the American contributions to ‘fair and equitable.’
The Minister has now told the CRTC that the streamers’ contributions, both financial and non-financial, “must be equitable given the size and nature of the undertaking and equitable as between foreign online undertakings and Canadian broadcasting undertakings.” This is not what the Hollywood streamers wanted to hear.
On the other hand, the Policy Direction on the ‘use of Canadian human resources’ is teasingly vague. It asserts that the Commission should ‘ensure that the [broadcasting] sector maximizes the use of Canadian and other human resources in the creation, production and presentation of programming in the Canadian broadcasting system.’
This means that the mulligan the Liberals handed to the foreign streamers in section 3(1)(f.1) of the Act —essentially a weaker requirement to hire Canadians on the shows they make or commission— is still very much in play and up to the CRTC to figure out. In the worst case scenario, it could even mean that Netflix will get credit for hiring Canadians on the US shows they make so they can hire fewer Canadians on the Canadian shows they produce.
Special Attention
The Minister has followed through with the commitments in C-11 to focus on more involvement of Indigenous peoples, equity-seeking communities and official language minority communities in the growth of programming serving those audiences.
Related to that, the Minister has also directed the CRTC to “support broadcasting undertakings that offer programming services that are of exceptional importance to the achievement of the broadcasting policy set out in subsection 3(1) of the Act.” That is policy semaphore for the CRTC to look at creating an industry subsidy for existing television channels that serve the LGBTQ+, multi-ethnic, disabled, and English and French language minority audiences that were disadvantaged by Bill C-11. The Minister had suggested as much when he appeared before the Senate.
And finally, the Minister gave faint hope to the local news stations that were studiously ignored in Bill C-11 by directing the CRTC to “consider the importance of sustainable support by the entire Canadian broadcasting system for news and current events programming, including a broad range of original local and regional news and community programming.”
Up Next
The CRTC has set June 27th as the deadline for interested parties to make written submissions on how to implement C-11. A request to extend the deadline is outstanding. [Update: the Commission has extended the deadline to July 12].
The draft Policy Direction will be posted in the Canada Gazette tomorrow and will be subject to public comment, possible changes and then final publication.
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The big media news story of the week was Meta’s announcement that they will perform an experiment on Canadians. As Google did in February, Meta CEO Mark Zuckerberg has decided to hobble the Facebook accounts of a million Canadians by preventing the sharing of news articles. That may include news organization accounts too.
This is in retaliation against Canada’s House of Commons for passing the Online News Act Bill C-18, a public policy remedy to Google and Meta’s monopolistic control of news distribution on digital platforms.
As the publisher of the Montréal news site La Presse told the Senate Committee reviewing C-18 this week, Big Tech is making a demonstration project out of Canada so that US Congress gets the message. By coincidence, Big Tech is doing the same in its home state of California where the a far milder version of C-18 was passed by the legislature on Thursday. (Check out the tweet above: the global hydra Meta lashing out at ‘out of state’ news organizations).
MediaPolicy.ca took a closer look (sorry, Seth Meyers) at what is at stake in a report on this week’s Senate Committee’s deliberations on C-18.
Either the Heritage Minister Pablo Rodriguez doesn’t know how to counter these Big Tech intimidation tactics or he has some political judo in mind and is waiting for the right moment. He wasn’t giving anything away in a recent CBC interview.
MediaPolicy.ca has been offering the Minister some free advice from time to time. Here’s some more: pull all government advertising from Google and Facebook until the experiments are stopped and the threats are withdrawn. Go a step further, challenge all political parties to do the same in unison.
In the meantime you won’t be able to share our posts on Facebook, I have disabled the button. Zuckerberg, take note. Our posts will only be shared on Elon Musk’s Twitter. As for Google, I am personally moving to Bing Search but you will note that the CBC video link above is to YouTube. There is no escaping some monopolies.
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There have been two television industry developments that flew under the radar (or at least MediaPolicy’s notice).
Bell Media announced at the beginning of May that it has negotiated the renewal of its exclusive Canadian licensing and distribution deal for Warner Brothers’ Home Box Office and Discovery channel (i.e. the content distributed direct-to-consumer in the US by Warner Brothers’ Max) . That means Bell retains this very profitable stream of US programming for its linear and streaming Crave service.
Another development and perhaps another weathervane event is that Eastlink, the mid-sized telco and cable provider based in Halifax, broke off talks to renew its carriage of Corus channels. It’s about price of course and the public statements from each party displayed the expected measure of commercial bravado. It’s one to watch.
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When the Heritage Minister appeared before the Commons committee last Monday he was asked by NDP MP Peter Julian when we can expect him to act on the Prime Minister’s instructions in his 2021 mandate letter to review the strategic direction of the CBC.
The Minister’s answer was that the CBC is no better than third in line at Heritage: first he has to complete his C-11 Policy Direction to the CRTC, then bring the Online Safety Bill to the House, and only then will the CBC mandate be up to bat. Maybe. News reports that action was any more likely than that were overly optimistic. It is unlikely the government has the administrative bandwidth or political will to do otherwise.
Reading the tea leaves, the government’s decision to extend CBC President Catherine Tait’s term until the end of 2024 doesn’t shout ‘change.’
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Two days of Senate hearings on Bill C-18, chock full of thoughtful witness commentary, proved one thing: the Online News Act is a dog’s breakfast of policy contradictions that satisfies almost no one.
The make-Big-Tech-pay legislation modelled on the Australian Newsmedia Bargaining Code was conceived as a public remedy for private news outlets who are on the wrong end of Google and Facebook’s market power over digital news distribution.
In the simplest description, the Bill regulates bargaining between platforms and news organizations over the fair price of news. Its distinguishing feature is binding arbitration that takes into account the value exchange between the news organization (who supply the content) and the platforms (who distribute it).
But grafted on to this elegant regulation of private market power are contentious views of what constitutes good media policy, in a peacock tail of colours.
There’s the crowd that is opposed in principle to the regulation of content distributed over the Internet.
There’s a larger crowd opposed to government involvement in the funding of independent media under almost any circumstances. Within that group are those who believe the free market in news consumption will produce a solution to the financial crisis in news if only we steady on and deny government mandated subsidies to news outlets holding out their hands. There are others who believe that government assistance to media, directly or indirectly, will greatly fuel a loss in trust of media.
Then there’s an even larger crowd who see no market solution emerging and fear the collapse of the news ecosystem, an existential threat to democracy.
All of these crowds are weighing in on a competition bill that has morphed into a media policy bill.
It’s no wonder the public debate is a jumble.
One thing made clear by the Senate witnesses is how dramatically news outlets depend upon access to Google and Facebook to reach their audiences. Figures provided to the Senate Committee from publications as diverse as the Globe and Mail and the digital community news chain Village Media is that 30% of their site traffic arrives via Google and 17% from Facebook.
These figures demonstrate two things at once: Big Tech’s price-setting market power over the digital distribution of news and, thanks to the ruthless news throttling tactics adopted by Google and Facebook, the ability to scare the pants off of the news organizations who support C-18 as the route to better compensation for their editorial product.
Observers of market power in information industries will tell you that if content providers depend on a distribution platform for any more than ten to 15% of their traffic, they are at a serious bargaining disadvantage on pricing their content. At twenty to 30% reliance, the gatekeeping platforms dictate all terms. According to Pierre-Elliott Lavasseur, the publisher of Montréal’s La Presse, the Big Tech platforms did just that before they ‘slammed the door in our faces.’
This is why the debate over what per cent of Google and Facebook’s overall traffic is news-related is sterile. Maybe Facebook’s telling us the truth that only 3% of their posts are news-related. But their three per cent news traffic is 17% of a news outlet’s access to its audience or possibly a quarter of a citizenry’s go-to for their news. The Google numbers are even steeper. We have a market power problem that needs fixing.
Along the way we learned some things at the Committee hearings.
Representatives from the two leading national newspapers (the Globe and Le Devoir) indicated they are financially sustainable on a reader-pay subscription model after 10 years of hard work.
Jeff Elgie of Village Media told Senators that over a similar period he has established a viable advertising-centric model, without subsidies, in community news. (Other small publications have not, so there is some serious research to be done on replicating Elgie’s success).
Unfortunately in the big fat demographic middle, the mainstream media serving urban communities cannot say the same as Village Media‘s Elgie or the Globe & Mail, at least not yet. Newsmedia Canada spokesperson Paul Deegan told the Senate that C-18 is needed so that the smaller publications get deals with Facebook and Google on the same pro rata funding as larger urban publications like the Toronto Star. Going one better, Le Devoir publisher Brian Myles endorsed a funding formula tied to journalist head count, but capped at salary levels in the smaller publications. [An earlier version of this post erroneously identified Newsmedia Canada as endorsing a salary cap].
Newsmedia Canada also arrived with a shopping list for other media policy initiatives it deems missing. Those include (1) the Liberals fulfilling their 2021 election promise to stop CBC News competing for advertising against private media; (2) the federal government redirect some of its own ad spend from Big Tech platforms to Canadian news media, and (3) the feds ratchet up anti-competition measures to get at Google and Facebook’s duopoly on digital advertising.
We also learned from Australian witnesses appearing before the Committee that Canadian rumours that small news outlets in Australia got the short end of the stick under the Newsmedia Bargaining Code was ‘fake news.’ Or to borrow Jen Gerson’s vocabulary, ‘a lie.’
Jesse Brown of Canadaland trotted out an argument against C-18 predicated on the claim that significant licensing payments flowing from Big Tech to Canadian news outlets would lead to reader loss of trust in news organizations, as had already resulted from the Liberals’ introduction of the QCJO federal aid to journalism in 2018. This claim is based on cherry-picking one chart (trust in journalists) among a series tracking loss of trust in a huge variety of public institutions, a fifty-year trend. If you check the data you will find that the long term decline in trust of journalists is only surpassed by a sharper decline in trust of medical doctors. Possibly the most significant poll on trust relevant to the C-18 debate is a Nanos study showing 63% of Canadians are confident the news media “works in the best interest of Canadians,” while only 37% think Google does and just 25% feel the same way about Facebook.
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Bullies aren’t likeable and US trade bullies even less so.
This week MediaPolicy posted in response to an American trade hawk goading the Biden administration to ‘fire-all-phasers’ at Canada and Bill C-11.
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It was a busy week for news about social media giants and the possibility of government regulation.
McGill University’s Taylor Owen and Facebook-whistleblower Frances Haugen published an op ed opposing government bans on TikTok but also imploring the Liberals to table their Online Safety Act.
In the US there is consternation that Meta is following Twitter in laying off content moderation staff. Meta just got hit with a multi-billion euro fine for ignoring EU laws on data transfers to its North American servers. The data is not just from Europeans’ Facebook activity, but the third party web data it collects from its users.
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Senate Committee hearings on federal legislation are more thoughtful than comparable proceedings in the House of Commons and this will be proven again this upcoming Tuesday on SenVu when we get another episode in the ongoing study of the Online News Act Bill C-18.
For those of you who, like MediaPolicy, aren’t pinned down by a day job, the Senators kick off at 9 a.m. with a pitch from Newsmedia Canada and also publishers Brian Myles from Le Devoir and Phillip Crawley of the Globe & Mail. As national newspapers, the Globe and Le Devoir may end up as the ‘last man standing’ in mainstream print news so it will be interesting to see how they position themselves in relation to C-18.
They are followed by Canadaland’s Jesse Brown (who will perform Jesse Brown); The Line’s Jen Gerson (who calls the Bill ‘a lie); and then, most intriguingly, Jeff Elgie of Village Media.
Occasionally I drone on about my favourite political columnists who for years have been Chantal Hebert and John Ibbitson. Their disciplined and insightful political analysis is what I admire even though they tamp down the stylism in favour of spare prose.
Paul Wells is the third member of the MediaPolicy political commentary pantheon. He combines political acumen, hard digging, and elegant prose. Judging from his Substack subscription numbers (multiplied by my $5 monthly sub), he’s wildly successful. It’s encouraging that at least for niche journalism the Canadian news market can reward great work.
Today I am adding the Globe’s Shannon Proudfoot to this august group. Like Wells, she offers pith with a rhetorical lilt. Her latest on Laurentian elites had me in tears.
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In the week following the CRTC announcement of a public consultation to determine how foreign streamers and Big Tech will contribute to Canadian programming under Bill C-11, a Canadian-educated academic at Georgetown University gave us a flash of the US trade bear’s teeth.
If the CRTC actually implements C-11 in any manner not satisfactory to American media companies, Marc L. Busch recommends the US government file the most aggressive trade complaint possible and “pump up the numbers behind its calculation of ‘equivalent commercial effect.’” Decoded, that means ‘exaggerate damages to US companies so as to justify the most extreme trade retaliations.’
Back to that, later in this post.
Busch is the sort of commentator who combines a free-market outlook with aggressive American trade policy, which is nice work if you can get it. He also tips his policy hand on where he stands on cultural regulation early in his column by offering that “the very premise of [Canadian content] guidelines is absurd in the digital age.”
Born in Wisconsin, Busch was educated at two state-funded Canadian universities and was briefly on the public payroll at Queen’s University. And so he has opinions on things Canadian (including who should win the next federal election).
One of them is about the television series ‘The Handmaid’s Tale.’ He offers this as exhibit A in his case for the absurdity of Canadian content guidelines for funding eligibility.
He’s not alone in pointing to the show based on Canadian author Margaret Atwood’s 1985 novel. The same connection has been made by Canadian IATSE Vice President John Lewis and Conservative Senator Leo Housakos in mocking the rules that certify CanCon shows based on Canadian ownership, cast and crew rather than identifiable Canadian themes.
The debate over a ‘Canadian passport’ versus a ‘theme’ test is a legitimate discussion that will take place before the CRTC in a few months. Heritage Minister Pablo Rodriguez may chime in with a Policy Direction on that point in the coming weeks.
It’s just that using ‘Handmaid’s Tale’ as cannon fodder for attacking the current rules is a dud.
The ongoing TV series and a movie made in 1990 are both true to Atwood’s plot in this respect: the story takes place in an identifiably American dystopia, a theocratic fascist state based in New England. Even in the narratively prolonged TV series, Canada is just a place for escape and refuge (which doesn’t occur until the fourth of five seasons).
Atwood did not write the TV screenplay. The producer, director, writer, and lead actors are not Canadian. The same thing with the 1990 movie except that Atwood co-wrote the script with Harold Pinter.
So in Handmaid example, there are neither Canadian themes nor Canadian ownership or creative leads. The series was shot in Canada, like 645 other US shows, with Canadian crews. By that standard, the X-Files is CanCon.
It’s not that you can’t dig up better examples of American-made movies shot in Canada that are thematically Canadian, starring a Canadian cast, but lacking Canadian ownership of the project. Netflix’s Jusqu’au Déclin (The Decline) is a good example.
It’s all grist for the mill in the argument over whether the current ‘Canadian passport’ system for certifying CanCon needs changing. But despite a handful of examples of uncertified ‘thematically Canadian’ movies, no one has ever conducted academic-standard research as to whether such exceptions are so prevalent as to undermine the policy basis for the current rule.
The MediaPolicy view is, may the best policy argument win.
But back to Professor Busch and his trade bear teeth and claws.
The gravamen of a trade complaint against C-11 is that if the US streamers get only obligations — like writing a cheque to CanCon film funds to make movies that as an American company they can’t buy without forfeiting the opportunity for full copyright—- they will have a credible complaint that C-11 violates the National Treatment ‘non-discrimination’ rule in the CUSMA trade agreement.
Busch’s innovation on this well-known trade argument is to intimidate by larding in every other available allegation, so as to magnify potential damages and therefore maximum retaliation.
On that point he cites the CUSMA chapter 14.10 rule against ‘performance measures.’ Essentially a rule against ‘Buy Canada’ or ‘Buy America’ laws, the chapter has been cited by Michael Geist and the Big Tech lobby association CCIA. Their argument is that Canada is allowed to require Canadian companies to meet local content or purchasing obligations, but not American companies.
Here’s the CUSMA text:
No Party shall, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party or of a non-Party in its territory, impose or enforce any requirement, or enforce any commitment or undertaking:
… (b) to achieve a given level or percentage of domestic content; (c) to purchase, use, or accord a preference to a good produced or a service supplied in its territory, or to purchase a good or a service from a person in its territory.
Taking the chapter to its hypothetical limit in the case of C-11’s cultural regulation, that would mean American companies are exempted from discoverability rules (s.9.1(1)(e) of the legislation) to promote Canadian shows and music, the use of Canadian talent or crews to make Canadian content (s.3(1)(f.1)), or even the requirement to spend an fixed amount on Canadian programming, all of which apply to Canadian broadcasters.
Whether chapter 14.10 applies to those C-11 obligations, and whether it effectively overrides the Chapter 14.5 National Treatment rule to treat domestic and foreign companies in an equitable manner, is difficult to predict.
In that trade fight, the US got its way by cynically over-calculating potential damages suffered by US ‘Canadian edition’ magazines in order to threaten hundreds of millions of dollars in retaliation against Canadian steel, wood and plastics. The threats were duly amplified by the targeted Canadian industries and the Conservatives. Judging from the final peace deal, the threats were quite effective.
What Busch wants in his column is to teach Canada a lesson, so as to “rein in [the] abuses of Bill C-11, and deter other countries from getting carried away with their own cultural protectionism.”
No doubt Hollywood and Big Tech will appreciate Busch’s advocacy. The utility of this kind of well timed threat-by-proxy is to remind the Canadian government, industry, citizens and especially the CRTC that the difference between trade war and peace is whether the regulatory price is right for US companies.
The task of Canadian leaders is to figure out a price that is just short of the US companies’ ability to convince the Biden administration to do their bidding.
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A footnote.
Despite the comments above on Handmaid’s Tale, all due respect to Margaret Atwood. She is the sort of cultural icon who gives no quarter and asks for none.
As far as I can tell, she has not advanced the case for the TV series based on her book to be eligible for CanCon funding.
And she also has to endure the ignominy of being cast unwillingly as a character in Pierre Poilievre’s campaign videos, the repentant cultural nationalist. Somehow I can’t see her caring.
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Ever since the CRTC issued its invitation for public submissions on the implementation of Bill C-11, a cottage industry in opinion pieces has flourished. Expect more of it. MediaPolicy.ca will be selective in posting about them: the full policy submissions that get filed by the public and the industry in June and July will generate more than a few posts.
Having said that, former CRTC Chair Konrad von Finckenstein published a reply in Cartt.ca to Doug Barrett’s piece on the definition of Canadian content and the hot button issue of copyright ownership of Canadian programs by American streamers. Von Finckenstein’s view is that international trade rules mean the Commission cannot deny copyright ownership to the US streamers while at the same time requiring them to spend money on Canadian content.
Barrett’s proposal is essentially a compromise, a King Solomon division of entrepreneurial opportunity. There are others who wouldn’t even go that far, we’ll hear from them soon enough.
As for information on C-11 that is of indisputable value, McCarthy’s lawyers Peter Grant and Grant Buchanan have generously re-issued their indispensable annotated Broadcasting Act publication as a free pdf file.
It’s about a complaint filed by Égale Canada asking the CRTC to kick Fox News off of cable TV owing to some typically egregious transphobia from the now ex-Fox host Tucker Carlson. As Menzies points out, the CRTC has been here before, most recently when the Heritage Minister demanded the CRTC give Russia Today the heave. There are a few other occasions like the Radio-Canada ‘n-word’ case where the CRTC was dragged into the censorship business and floundered doing so.
Because these kinds of complaints are so infrequent, most Canadians are not aware that CRTC regulations passed in 1987 for television and radio include a content code that prohibits ‘abusive comment’ and ‘misinformation.’
Those legacy regulations do not as yet apply to the ‘online undertakings’ that are now recognized as broadcasters under the Online Streaming Act (although C-11 is drafted so that a private broadcaster distributing its programming through a social media platform cannot be held accountable by the Commission.)
Menzies is right in observing that in an Internet world, where Fox News can do an end-run around Canadian television regulations with ease, the Commission needs to re-establish a coherent policy on awful but lawful content. One new consideration is that C-11 gives the Commission new powers to issue fines instead of choosing between wrist slaps and de-platforming.
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One of the peculiar features of Bill C-18 the Online News Act is that its central assumption, that Google and Facebook owe compensation to news outlets for making their unlicensed editorial content available to the public, has never been proven empirically. The Line columnist Jen Gerson even called it ‘a lie.’
The idea that the news outlets give Big Tech more value in monetizable news content than they get back in distribution was put forward by the Australian author of the Newsmedia Bargaining Code, the model for Canada’s Bill C-18.
Australia Competition Commissioner Rod Sims wrote in 2019 that Google and Meta’s anti-competitive duopolies in Search and Social made it impossible to accept the current rates of compensation (including no compensation) as a valid market price for news.
You might think that independent research would be available to settle the question, but it’s difficult in the absence of data which is proprietary and resides mostly with the Big Tech platforms.
But for the purposes of fighting this out as an issue in public policy, the contestants are beginning to publish opinions about the contested value exchange through sponsored third party studies.
It will not surprise you that a study sponsored by Meta went its way; another study about Google that was sponsored by news outlets went the other.
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About a week ago a lot of commentators went over the top in expressing their outrage at a remarkably stupid resolution passed at the federal Liberal Party policy convention.
The resolution aimed at combatting ‘fake news’ —which is what we are still calling hyperpartisan opinion pocked with unverified facts or conspiracy theories— went so far as to demand federal legislation require the ‘disclosure of sources’ as a condition of publication. In other words, the proposal was on its face calling for a police state and the end of independent journalism.
It didn’t take long for Liberal politicians to disavow the resolution. Indeed its sponsor, a rank and file convention delegate, claimed she hadn’t thought it through, which is the most believable if dispiriting explanation.
The real story was that the Liberal Party officials running the convention didn’t spot the problem in advance and apparently did not speak against the resolution or otherwise shove it into the ditch.
Having attended my share of union conventions in the past thirty years I am sympathetic to the hands-off approach to a bad resolution but even so you would have expected much better floor management.
Lost in all of uproar is the legitimate if badly expressed motive behind a truly goofy resolution: we have moved into a new era of public debate in which the symbiotic relationship between trust and truth has been significantly disrupted by bad actors. And it’s legitimate to ask who should be held accountable for that.
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Yesterday CRTC Chair Vicky Eatrides published Broadcasting Notice of Consultation (BNOC) 2023-138, the Commission’s roadmap to implementing Bill C-11.
Here are the highlights followed by some MediaPolicy commentary.
The Commission is aiming to having the Bill operational by the Fall of 2024.
Prior to then, there will be a downpayment by foreign online undertakings on making financial contributions to Canadian content; the MediaPolicy guesstimate is April 2024.
Eatrides says she is not touching any regulation of user generated programs, but that commitment is subject to important caveats.
She is spinning off the debate over the definition of a Canadian video program or song to another proceeding for which a timetable is yet to be announced.
Participants (and industry players) have to file their submissions to the CRTC in a lightning quick six weeks, before a June 27th deadline. The first day of public hearings is November 20, 2023. That date might seem unreasonably delayed, but once you digest how many issues the Commission has to prepare for, you might not think so.
Here’s the commentary.
User Generated Programs
Let’s begin with the discoverability of user generated programs on YouTube and TikTok, as this is the issue that attracts us policy moths to the flame.
The vocabulary of BNOC 2023-138 is consistent with Eatrides’ earlier public statements: the Commission has ‘no intention’ of ‘regulating’ YouTube creators or their user-generated content.
Caveat #1. For now. Not in “this proceeding” (i.e. 2023-138):
41. Sections 2.1 and 4.1 of the current Broadcasting Act also provide for a rather complex set of exclusion provisions with respect to social media services and users who upload programs on these services. The Commission does not intend to regulate any aspect of a social media service, nor does it intend to “prescribe” user-uploaded content on social media services for the purpose of regulating such content, as part of this proceeding. The Commission is also cognizant that it should avoid imposing regulatory requirements on broadcasting undertakings if that imposition will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1) of the current Broadcasting Act.
Caveat #2: ‘Regulating’ programs can mean a lot of things, or not, under the Broadcasting Act.
Caveat #3: When Eatrides says she won’t regulate user generated content she doesn’t mean ‘discoverability’ obligations for Canadian programs. YouTube will have some kind of discoverability obligations, they just might not involve the algorithmic ranking of program recommendations:
As indicated above, the Commission intends to apply an approach that focuses on desired performance standards and measures of success without specifying the means or the method for achieving them. In this regard, the Commission does not intend, at this time, to prescribe or require an undertaking to use a certain method or tool in order to achieve desired promotion and discoverability outcomes.For example, the Commission would not require an undertaking to change marketing strategies or prescribe specific home page or search engine functions. Moreover, the current Broadcasting Act prohibits the Commission from making orders pursuant to paragraph 9.1(1)(e) that that would require the use of a specific algorithm or source code. It would be up to the undertakings to decide which tools are best suited to achieve the identified outcomes regarding promotion and discoverability. However, the Commission will need to understand how those tools are utilized and measured to assess whether the identified outcomes are being achieved.
Eatrides’ view (on many things in this BNOC) is that regulation should be ‘outcomes based,’ which is regulatory code for ‘give us a good result any way you choose.’ This is very similar to how former Chair Ian Scott envisioned the Commission’s approach to discoverability last June when testifying before the Heritage Committee.
You can probably read into these statements emanating from the Commission as the regulator wanting no part of the culture war that has been stirred up over the ranking of content recommendations.
A good guess about the shape of the Chair’s desired ‘outcome’ is that the Commission will leave it to online undertakings to figure out discoverability on their own and then present it to the Commission. How effectively these self-designed outcomes are measured and enforced by the Commission is something we will have to wait for.
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The Money
There are three issues here.
How much should online undertakings contribute to Canadian content, in what manner, and where does the money go? Which content funds get the money?
How do those obligations, when imposed on a kaleidoscope of foreign media companies, get implemented in a way that is equitable and fair to our existing broadcasters who are licensed to provide a wide spectrum of Canadian content genres (such as unprofitable drama and local news)?
How do we rethink our existing content funds given the elevated expectations in C-11 for programming relevant to diverse communities and Indigenous Peoples? Or do we need to start up new ones governed by the communities themselves? How do we reinvent local news funding given its unravelling business model?
Eatrides wants a downpayment of sorts from the Californian streamers and other online giants.
So she has split up their future financial obligations into two pieces: the first is a basic initial contribution to a content fund (for example the Canada Media Fund or the Independent Local News Fund) as a common denominator shared by all broadcasting undertakings.
Whatever that contribution is, it is supposed to be in place in the first half of 2024.
The second, additional layer of financial contributions to CanCon will be more custom-fit to the nature of the online undertaking. It could just beef up its base contribution to a content fund or alternatively it might be an ‘expenditure’ obligation (for example, Netflix broadcasting Canadian programs it has made or purchased). As part of this additional contribution, there will be ‘intangible’ contributions expected such as the promotion and discoverability of Canadian programs on their platforms.
Another important point Eatrides makes about these additional expenditures beyond base is that they might be custom fit to the broadcasting undertaking’s favoured production fund or programming genre. The rules might even include getting credit for non-programming expenditures like training and internships. That will be catnip for corporate accountants who specialize in that kind of regulatory hokum.
The custom-fitting idea is not new: the Commission mooted it almost five years ago in its report on regulating online undertakings, Harnessing Change.
A Commission official interviewed yesterday by Cartt.ca suggested online undertakings might be regulated in very individualized ways:
“Someone might come and say…we would do it in thirds. We’ve assessed our contribution at a certain level — a third of it would be a contribution to a fund, a third of it would be our support for Canadian programming, a third of it might be what we’re calling the ‘intangibles,” a CRTC official said, adding the regulator would have to further figure out how to value those contributions.
“You can see that mix, and it would be different for each player,” the official said, emphasizing that all players are required to contribute to the base amount.
All of this tells us that this is not your grandma’s regulatory scheme. There will be pricing of apples and oranges among various broadcasting undertakings making different —but equitable– contributions to Canadian content.
Perhaps that is why the Commission vocabulary is so chock full of regulatory zingers like ‘flexible,’ ‘adaptable,’ and ‘outcomes based.’ It’s a matter of pragmatism as much as deregulatory zeal.
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Canadian content and Ownership of Intellectual Property
This is without a doubt the most difficult issue before the Commission. You will hear plenty about it over the next year.
The current definition of a ‘Canadian’ program eligible for the array of subsidies available in Canada provides that most of the key creative talent on a show, especially the producer who is quarterbacking the venture, must be Canadian. Those subsidies include ‘video production tax credits’ under the Income Tax Act, film and television financing from the Canada Media Fund, and broadcasters getting credit from the CRTC towards their target for ‘Canadian Programming Expenditures’ (CPE) for airing Canadian shows. If a show maxes out on Canadian talent, the show may be 50% subsidized.
Most of the subsidy programs —the Commission-administered CPE being the exception— also require the Canadian producer retain the copyright for the long term commercial exploitation of the show, in effect making it illegal for broadcasting undertakings to force the producer to surrender that copyright as a condition of putting the show on the air.
The most important thing to keep in mind to understand this complex issue is that broadcasting undertakings —soon to include Netflix and the other Hollywood streamers— could potentially be ordered by the CRTC to contribute to the Canada Media Fund (CMF) as the Canadian cable companies must.
Yet unlike our Canadian cable companies, the American-owned streamers would not be allowed to ‘draw upon’ the Canada Media Fund by purchasing CMF-subsidized films from a Canadian filmmaker unless the streamers are okay with the filmmaker denying them the long term copyright.
You have here the makings of a doozy trade complaint from Hollywood against the Canada for potentially violating the ‘National Treatment’ rules under our international trade deals. In a different context, MediaPolicy explained those issues as they arose 25 years ago during the notorious ‘split-run magazine’ dispute between Canada and the US.
This issue has been long anticipated from the very beginning of Parliamentary debate over Bill C-11 and its predecessor C-10. And you can Search ‘Bill C-11 CUSMA trade complaint‘ and come up with plenty of commentary on it. The most recent contribution from Douglas Barrett on Cartt.ca is a good place to start.
One last complexity to keep in mind: the CRTC only has jurisdiction over the definition of Canadian content for ‘CPE.’ The federal government has governance of the production tax credits and, ultimately, the CMF.
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It seems only fair to sign off this commentary by allowing CRTC Chair Eatrides the last word:
A new and modernized framework should recognize the new perspectives and opportunities that online undertakings bring to the broadcasting system, and ensure flexibility and adaptability in the future. For these reasons, the Commission intends to apply an approach that recognizes that each broadcasting undertaking or group of undertakings is unique, and that focuses on desired performance standards and measures of success. At the same time, it is essential for the approach to ensure that the principles of regulatory fairness and equitability are upheld across all contributors. Further, by considering the possibility of a group-based approach to contributions (where applicable) the Commission aims to provide greater flexibility and a reduced administrative burden.…
…..the Commission recognizes that it continues to be appropriate for different types of broadcasters – whether traditional or online, Canadian or foreign – to support the audio and video elements of the Canadian broadcasting system in different, yet equitable ways.
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