Instead of plugging the holes in a sinking newspaper ship with successive bailouts, Ottawa should formulate a long-term national news media strategy that doesn’t undermine public trust in journalism, according to a former senior journalist and media regulator. “Canada is on the cusp of making most of its journalists permanently dependent on the federal government,” writes Peter Menzies, a Senior Fellow at the Macdonald-Laurier Institute. “While this may permit some of the legacy news organizations to continue to survive financially, this new connection to politicians is eroding public trust in both government and news organizations.
“A long-term national news media policy is now not just necessary, but vital and urgent…The entire news industry in Canada is poised to become dependent on government subsidies and there is no plan to return it to independence.”
Ottawa has poured hundreds of millions of dollars into the foundering newspaper industry since 2018, when it introduced a five-year, $50 million Local Journalism Initiative to improve news coverage in under-served communities. That was followed in 2019 with a five-year, $595 million package of tax credits for news media outlets. The Québec government also contributed $50 million for news media outlets in that province, while under COVID all Canadian businesses were eligible to apply for Ottawa to cover up to 75 percent of their payroll expenses under the Canadian Emergency Wage Subsidy (CEWS) program.
“Some of these were initially intended as temporary measures to assist companies trying to transition into the digital age,” writes Menzies in his white paper titled Fixing the Media’s Trust Deficit. “But as companies fail to do so, these subsidies and credits are becoming permanent.”
The Local Journalism Initiative was recently renewed for a sixth year, while Ottawa also quietly announced another $40 million in funding over three years called Special Measures for Journalism. The $595 million bailout will be ending soon, so Ottawa is planning to force Google and Facebook to subsidize news media with Bill C-18, which is currently before parliament. Also known as the Online News Act, it passed second reading in the spring and is set to undergo clause-by-clause consideration before the Heritage ministry’s standing committee on Friday. Meta has threatened to stop carrying links to Canadian news stories if it is forced to pay for doing so, however.
To qualify for government subsidy, news media outlets must apply to be deemed a Qualified Canadian Journalism Organization by a government-appointed panel. “No matter how delicately managed,” notes Menzies, such a panel “puts the government in charge of determining the social value of one media organization over another.” Some news media, such as Blacklock’s Reporter and Canadaland, have refused on principle to apply for government bailout money.
“How can a news media industry that depends upon the good graces of politicians and quasi-monopoly tech companies possibly be viewed by the public as capable of holding these powerful entities to task,” asks Menzies, a former publisher of the Calgary Herald and vice-chair of the Canadian Radio-television and Telecommunications Commission. “Trust is the social capital component that many consider vital for journalism to flourish within a liberal democracy.”
Public trust in Canadian news media has unfortunately bottomed out, according to multiple surveys, largely due to the introduction of government funding. A report from the Reuters Institute recently found that trust in news media here has dropped 13 percent since 2016, with only 42 percent of respondents now saying they trust “most news, most of the time.” The latest Edelman Trust Barometer found that while 71 percent of Canadians said they trusted the news media three years ago, that number has fallen by almost half. An Abacus survey earlier this year found that 44 percent of Canadians believe that much of the information they receive from news organizations is false.
Ottawa’s latest cash injection and its attempt to shake down the tech platforms “will only make matters worse,” writes Menzies. “Given the perilous financial state of most traditional news organizations, further declines in trust can only lead to the need for more subsidy and, with that, less trust, and so on.”
Another problem with government intervention in the evolution of news media from print to digital, he adds, is that it removes incentives for innovation and adaptation. “What is required to manage change is invention and entrepreneurship, but the government and the CRTC appear focused on preserving what is left of failed structures designed for the 20th century.”
Another factor eroding public trust in Canadian news is the unpleasant reality that most of our largest newspapers are majority owned by a New Jersey hedge fund due to Ottawa’s failure to enforce our foreign ownership limits. Canada’s newspapers have adopted the strategy successfully employed in Australia by media mogul Rupert Murdoch, to prevail on the government to force Google and Facebook to pay news media for supposedly “stealing” their content merely by linking to it.
“So long as government appears prepared to sustain legacy news operations through subsidy and dependence on offshore tech company revenue, there will be less room in the market for the revitalization it needs,” writes Menzies. “This is not good public policy.”
He suggests reducing the role of the CBC, which he claims has “a perverse impact on the news industry ecosystem” because it operates by far the most popular online news operation in Canada with the aid of an annual $1.3 billion government subsidy. “The CBC has to all intents and purposes extended its broadcasting mandate to become an online ‘newspaper’—one that is available at no cost to consumers. This is clearly to the detriment of the hundreds of online ‘newspapers’—both those that have launched in recent years and those longstanding companies trying to transition from print to digital.”
Its subsidy allows the CBC to charge advertising rates below market value and to give its news away free, argues Menzies. “Meanwhile, the Globe and Mail, Toronto Star, Postmedia, and others strive to establish subscriber bases to support their work.”
Instead of a patchwork quilt of bailouts, Menzies argues that Ottawa should develop and implement a national media strategy focused on creating a market-based news industry that meets the need of citizens to be accurately informed on current events. It should be pluralistic in ownership, he adds, and recognize that public trust “can only be sustained and flourish if the journalism industry is independent from government funding or approval.” While inspiring and supporting the innovation and entrepreneurship required for the industry to move into a new era of digital news delivery, it should also accept that some media organizations which prove incapable of transitioning to the digital age will fail.
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.