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Bell’s latest layoffs and closures show Canada’s news media need a major revamp

The telco’s profits soared to $10.2 billion last year

Media Canadian Business

Photo by A Great Capture/Flickr

The suits at Bell Canada have once again demonstrated that they have no concept of the social responsibility they owe Canadians for being allowed to profit so richly from communication in this country. As a result, 1,300 more workers—or fully six percent of its Bell Media division—will be cut loose from the payroll while a half dozen more local radio stations are shut down and CTV’s bureaus in London and Los Angeles shuttered.

The cuts come despite Bell having recorded operating profits of $10.2 billion last year, which is more than the GDP of dozens of countries. That was up $306 million from 2021 and came at a scandalous profit margin of 42.2 percent. Company president and CEO Mirko Bibic justified the cuts by saying Bell expects to lose more than $250 million in legacy phone revenues per year, while its news operations lose $40 million a year and its radio stations have seen their profits cut in half by the pandemic. He made no mention of the fact that overall company revenues and profits both increased by 3.1 percent last year, while its earnings per share rose by five percent. Bell added a million subscribers across it range of services last year to hit 21.6 million, including almost a half million more mobile phone customers, all of which is trumpeted to investors in its latest annual report.

In a memo to staff, Bell Media President Wade Oosterman cited as reasons for the cuts a “migration of advertising revenue to foreign digital platforms,” such as Facebook and Google, a shift from cable TV to digital streaming, and “a challenging regulatory environment that has been too slow to adjust.” Ottawa has been busy reforming its communication regulations, however, earlier this year passing Bill C-11, the Online Streaming Act, which would tax and regulate foreign streaming services such as Netflix. Bill C-18, the Online News Act, which is currently before the Senate and could become law this month, is estimated to require Google and Facebook to pay $329 million a year to Canadian news media, including broadcasters. Bell’s chief legal and regulatory officer Robert Malcolmson criticized “relentless regulatory intervention” by Ottawa to bring down the cost of telecommunication services, quipping that “maybe it’s time to declare victory” for Ottawa. “The government’s sort of populist focus on pricing isn’t necessarily in line with current reality,” he added. Bibic warned just last month that “interventionist” regulations from Ottawa could prompt companies to make cuts.

Bell Media, which includes the CTV network, 29 specialty cable channels such as TSN and BNNBloomberg, plus more than 100 local radio and television stations across the country, is Bell Canada’s least profitable division but employs about half of the company’s staff. It recorded profits of $745 million last year on revenues of $3.5 billion, for a profit margin of 21.3 percent. That was dwarfed by its wireless division, Bell Mobility, which made a profit of $4.1 billion on revenues of $9.6 billion, for a profit margin of 42.7 percent. Bigger than both of those combined, however, is its wireline division, which provides not only telephone and cable TV service, but also lucrative broadband Internet access. It made a 2022 profit of $5.3 billion on revenues of $12.1 billion, for a profit margin of 43.8 percent.

Bell Canada, which was founded in 1880 by telephone inventor Alexander Graham Bell, is the country’s 8th most profitable company after five banks and two oil companies. Internet access revenues by Canada’s four (now three) telecom giants rose by $1.2 billion last year to $14.5 billion, according to a recent Carleton University report.

The cuts come less than a year after last summer’s firing of CTV National News anchor Lisa LaFlamme, with whom executives had clashed over matters of journalism but whose ouster came after she allowed her hair to go grey during the pandemic. LaFlamme’s firing caused a public backlash and led to a slide in ratings for CTV’s national newscast.

The incident was yet another black eye for Bell Media, whose then-President Kevin Crull was fired in 2015 after a scandal broke that revealed he had been meddling in news coverage. Oosterman, a veteran of the telecommunications industry with no journalism experience, was moved from president of Bell Mobility to replace him. Since a brief drop in the division’s revenues during the pandemic, he has been cutting staff and stations ruthlessly. He laid off hundreds of workers abruptly in early 2021 and closed several radio stations across the country, which drew widespread criticism. It also brought calls for an end to Bell’s annual “Let’s Talk” promotion designed to raise mental health awareness, which had recently preceded the layoffs and closures. Ottawa briefly pledged to cease its partnership in the event before reversing the decision.

Those cuts pale in comparison, however, to the scythe that was just taken to the company’s workforce in its apparent feud with regulators in Ottawa. It should also be seen as a shot across the bow of incoming Canadian Radio-television and Telecommunications chair Vicky Eatrides, who has been given a mandate to steer Canada’s media, including now foreign streaming services, while also acting as a referee in Canada’s newspapers in their dispute with Google and Facebook.

The enormous profits that Bell makes from its licences to operate often monopoly telecom services in Canada should require that it maintain a certain level of content provision despite the ups and downs of the economy or its relations with Ottawa. Its executives should remember that those licences could easily be assigned to other operators more willing to consider their obligation to Canadians.

This latest sorry episode is just another example of the crying need for a total revamping of Canada’s communications system, especially in news. The recent takeover of Shaw by Rogers and the latter’s inexcusable days-long service interruption last year are further evidence that Canada’s telecom overlords are simply becoming too powerful and arrogant.

Maybe bigger isn’t better after all. Rogers made $6.9 billion in profit last year, up 9 percent from 2021, while its profit margin rose from 40.3 percent to 41.5 percent. It just grew by about a third with its acquisition of Shaw and is now almost as big as Bell. They should both remember that their fat profits come off the backs of Canadians, and that the privilege of continually and increasingly gouging us can be revoked at any time for non-performance.

Perhaps new stewards of our communications system are needed who will give a little bit more back to their customers and keep a little bit less for their shareholders and executives.

Marc Edge is a journalism researcher and author who lives in Ladysmith, BC. His books and articles can be found online at www.marcedge.com.

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