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Corporate ownership of media has failed Canadians

The only path to a sustainable news media is to promote the non-profit alternative

Media Canadian Business

For-profit media ownership has decimated journalism in Canada and continues to gouge us with some of the highest prices in the world for telecommunications services such as cellular phones, cable TV and Internet access in order to meet the ever-greater profit expectations of their owners. The private equity players and US hedge funds that own most of our largest newspapers are now harvesting them for hundreds of millions in cash and stripping their assets, all the while complaining to Ottawa that they’re losing money and need subsidies. Postmedia Network, which owns 15 of our 21 largest dailies, has been laying off journalists relentlessly for the past 14 years in order to drain the company of more than $500 million in debt payments. The owners and shareholders of our gigantic telecom companies demand greater and greater profits to feed their ever-increasing dividends. Their executives are given huge incentives to deliver, often receiving millions in bonuses and stock options for satisfying shareholder demands at the expense of the public. The results can be devastating, as we saw last week with the layoff of 4,800 media workers by Bell, which distributed almost $3.5 billion in dividends to its shareholders last year, up from just over $3.3 billion in 2022.

There’s got to be a better way.

Luckily there is. As corporate media have been going the way of the dodo in the US, non-profit news media, mostly small and locally-owned, have been springing up to fill that vacuum due to provisions of that country’s tax code which allow them to accept charitable donations. The result has been a “media gold rush” there, as Ian Gill described it in his 2016 book No News is Bad News, which has also been aided by “vast wellsprings” of venture capital, a legacy of media innovation and opportunities for developing journalism talent. “None of these factors apply in Canada,” he added. Magda Konieczna, a Concordia University journalism professor who studied US non-profits for her 2018 book Journalism Without Profit, agrees that “Canadians have a lot to learn from the US about nonprofit news.” Her research over more than a decade has shown that non-profit journalists “aim to re-connect citizens with news about public affairs primarily through a rebuilding of community trust.”

Charitable status has enabled the founding of journalism organizations in the US such as the Center for Investigative Reporting (1977), the Center for Public Integrity (1989) and ProPublica (2007), along with a growing number of local publications such the Voice of San Diego (2005) and MinnPost (2007). The California-based Institute for Non-Profit News now boasts more than 425 members, including a handful in Canada, with the number nearly doubling since 2016.

Ottawa did include a provision in its $595 million news media bailout in 2019 which allows non-profit media outlets outlets to apply to the Canada Revenue Agency for charitable status, under which they may issue receipts for tax-deductible donations from both citizens and foundations, most of which are funded by the rich to avoid taxes. Five years later, only 11 media organizations have qualified under this provision, including Montréal’s former daily newspaper La Presse, which went non-profit and digital-only in 2018, and its Le Devoir, which went non-profit in 2015 and made the complicated conversion to charity last fall. The reason so few have gone this route, according to Carleton University journalism professor Chris Waddell, is that “it’s still expensive and time consuming for media organizations to become charities.” The long list of rules, he notes, includes “keeping detailed financial records, issuing tax receipts that satisfy CRA regulations, filing annual returns, establishing an arm’s length board of trustees, and ensuring operational independence.” To be eligible, Le Devoir had to convert its shares into loans and shareholders had to renounce their right to dividends.

Charitable status is nothing new for magazines, several of which are published by foundations and qualify as educational, including The Beaver, Opera Canada, Canadian Art, This and Canadian Geographic, but they have often had to fight for that status. The Walrus fought a years-long battle with the CRA before finally getting charitable status for its publishing foundation in 2005, and the foundation that publishes Canadian Dimension had its status revoked in 1980 after the government deemed its purpose was to “promote a particular political ideology.”

Politics is about the only thing that stands in the way of more newspapers applying for charitable status in the US under Section 501(c)(3) of its tax code, as they can then no longer endorse candidates for office. Even their news coverage would have to be non-partisan, as the section prohibits “bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates.” Then again, a non-partisan press that allowed voters to make up their own minds might not be such a bad thing.

Despite the restrictions on partisanship, several major US dailies have now gone non-profit and qualified as 501(c)(3) organizations, although they must still pay tax on the advertising they sell and any profits must be re-invested in its operations. The 138-year-old Salt Lake Tribune in Utah took the plunge in 2019, and must now disclose its donors, mission, code of ethics and even its finances. The latest income tax return posted on its website shows that in 2021 it took in $13 million in revenue, including $1.8 million in contributions and grants, paid $6.67 million in wages and salaries, and made a profit of $1.8 million, on which it paid $41,967 in taxes.

The Chicago Sun-Times, which never recovered after being ravaged under Conrad Black’s ownership in the 1990s (for which, in part, he went to prison for five years), became a non-profit in 2022 when it merged with Chicago Public Media, owner of the city’s National Public Radio affiliate, which raised $61 million in philanthropic support to acquire and fund the newspaper. The Philadelphia Inquirer and Daily News went through years of bankruptcy proceedings and changes in ownership before being bought by local cable tycoon Gerry Lenfest, who donated them to his Lenfest Institute along with a $20 million endowment to help secure their future. The Portland Press Herald was recently bought, along with its almost two dozen community newspapers, by the Maine Trust for Local News.

The trend to non-profit ownership is also being seen in other countries. The majority shareholders of the leading French daily Le Monde recently announced that they would donate it to a foundation controlled by its journalists and other employees. In the UK, the Guardian has been owned since 1936 by the well-endowed Scott Trust in order to preserve its financial and editorial independence.

These alternatives to corporate for-profit ownership should be encouraged more in Canada to help our benighted news media recover from the ravages of private equity, rapacious hedge funds and insatiable owners and shareholders.

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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