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‘Goliath versus Goliath’ media battle being fought between Big Telecom and Big Tech

A new form of media convergence is intensifying the rivalry between Canada’s dominant telecoms and global digital giants

Media Canadian Business

A new form of convergence is roiling Canada’s media, according to Carleton University’s annual report on the state of media industries here. Our media were ravaged at the millennium by the convergence of ownership between newspapers and television which has left both on life support. A quarter century later, a new form of media convergence sees Canada’s big telecom companies, namely Bell, Rogers and Telus, engaged in a turf war with global tech firms.

“In Convergence 2.0, we are seeing digital communications and media aggregation and distribution platforms increasingly bumping up against the telecoms and internet access providers’ turf,” noted the report released last week by the Global Media & Internet Concentration Project led by Professor Dwayne Winseck. “This is generating a Goliath versus Goliath clash between the largest telecoms conglomerates in Canada versus a phalanx of multinational big tech conglomerates, streaming giants like Netflix and Spotify.” The growing riches available from digital content provision have resulted in an intensifying rivalry between Canada’s dominant telecoms and global digital giants such as Google, Meta, Amazon and Netflix, according to the report. “The heart of this battle is over the fast-evolving $27 billion online media economy: internet advertising, streaming video and music services, video games, social media, online news, and app store distribution.”

The battle over digital content revenues has seen Big Telecom and Big Tech apparently even subsidize their prices in order to support their far more lucrative core businesses, according to the report, such as telecom services (Bell), device sales (Apple), e-commerce (Amazon) and advertising (Google). “If this is true, is this acceptable,” asks the report, “or should using ‘free’ media to drive customers to paid communications and streaming services be considered akin to dumping media goods on the market?” One example the report offers is the free streaming content included in Amazon’s popular Prime subscription package which provides free delivery of its retail products. “How can commercial media compete with ‘free?’ Answers to these questions are not obvious.”

The battle has so far been fought in the court of public opinion and in Ottawa over federal legislation such as the Online Streaming Act and the Online News Act, which were passed last year and now require foreign digital firms to forfeit a portion of their Canadian revenues. But while the focus of these debates has often been concerns over media dominance of markets or public opinion, the report finds that they have often been overblown by the vested interests involved. “On closer inspection, the empirical basis of those concerns is often remarkably thin and filled with examples aplenty of cherry-picked data being mobilized toward preferred policy ends and media criticism,” the report concludes. “While it is commonplace to blame big tech companies and streaming services for a generalized crisis of media, no such crisis exists.” This is a conclusion Winseck has reached repeatedly over the years as a result of his research into Canada’s media economy, most notably in his groundbreaking 2010 study of poverty pleadings by our media resulting from the 2008-09 recession and in his 2017 evisceration of the “Shattered Mirror” think tank report which nonetheless served as justification of the ongoing $595 million news media bailout announced the following year.

Winseck’s annual report on the media economy in Canada provides a valuable snapshot of industry health that helps to cut through the self-serving rhetoric offered by media companies in pursuit of government policy favours. Reliable data on media finances are becoming harder to find, often by design, the report notes. Media companies and their industry associations have become more guarded in their financial reporting in order to help obscure the true picture and thus better plead their case to Ottawa. “Broadcasters and publishers are becoming especially tight-lipped under relentless pressures to survive,” the report notes. “Tellingly, News Media Canada has discontinued several annual reports on newspaper ownership, revenue and circulation.” Major newspaper publishers such as the Globe and Mail and Torstar are privately held companies, it adds, and thus need not divulge much information about their operations despite now receiving hundreds of millions in government subsidies. “This is especially galling when these same news media groups have been benefitting recently from an increase in public funding and policy support,” the report scolds. “Several decades of business-friendly regulation has also compounded the problem. The upshot is this: knowing the telecom, internet and media industries is as hard as ever.”

The Global Media & Internet Concentration Project, which is part of an international network of similar academic efforts in almost 40 countries, counts media company revenues as an indicator of industry health. Its latest report finds that media revenues in Canada rose 5.4 percent in 2023 to hit $108.1 billion. Online digital media have grown rapidly since the pandemic, it notes, when they “became more firmly lodged into every nook and cranny of our lives,” but falling revenues for legacy media, such as broadcast radio and television, newspapers and magazines, could see them “soon fade to black.” Revenues from such things as online advertising, app sales and streaming media, which were negligible at the millennium, soared to $27 billion in 2023, which was up 70 percent in just four years. Digital content sales are thus now more than double those of traditional media, whose revenues fell in 2023 to only $12.3 billion, making total media content revenues just $40 billion. That figure was in turn dwarfed by the $68.8 billion raked in by the carriage companies dominated by Big Telecom, which reap vast riches from internet access, telephone service, cable TV and mobile. Bell continues to rank as the largest media company in Canada based on revenues, as it has for more than a century, pulling in $24.9 billion in 2023, or 23 percent of the total. Rogers is catching up, however, as a result of its blockbuster takeover of Shaw last year, which catapulted it into second place with $20.2 billion in revenues and a market share of 18.7 percent. Telus had revenues of $17.2 billion for a share of 15.9 percent, meaning that the three big telecoms in Canada combined for revenues of $62.3 billion in 2023, or a whopping 57.6 percent of our entire media economy.

Google ranked as the largest foreign-owned tech company operating in Canada, according to the report, with an estimated $9.1 billion in revenues here, which gave it 8.4 percent of the market. Meta’s revenues of $4.2 billion in 2023 were a sharp rebound from the previous year, which saw their first-ever decline in Canada, no doubt as a result of its resistance to revenue forfeiture under the Online Streaming Act, which saw it instead block news on its Facebook and Instagram social networks while some governments and businesses here pulled their advertising in retaliation. Meta’s place in the Canadian media economy appears to have peaked, the report notes, as its share of online advertising revenues here has slipped from a high of 31 percent in 2021 to 25.3 percent last year. Together with Amazon, the big three foreign tech firms control 89 percent of the $16.6 billion online advertising market in Canada, while domestic companies account for only an estimated six percent.

Other findings by the report include:

  • The number of full-time journalists in Canada fell by 1,500 last year to 10,900, down from a peak of 12,600 a decade earlier. This is a departure from earlier research by Winseck which disputed claims of widespread journalism job losses. A 2019 paper he co-authored cited Statistics Canada data to conclude that there were “in fact more journalists in absolute terms at the time of writing than at most points in the past 30 years.”
  • Revenues from Internet service provision leaped again in 2023 to $16 billion, an increase of 6.7 percent, more than half of which went to Bell and Rogers. This lucrative revenue stream, which provides monopoly profit margins approaching 50 percent, is dominated by the largest telecoms, which the report notes “have steadily increased their share of the ISP and mobile wireless markets, despite efforts by governments and regulators to bolster competition since late-2000s.”
  • Elon Musk’s Starlink is now Canada’s sixth-largest Internet service provider, with 400,000 subscribers and $420 million in revenue. “By serving rural, remote and Indigenous communities it exposes long-running policy and industry failures, but risks becoming a monopoly by undermining rival providers such as Xplornet and Northwestel.” A sidebar written by Carleton doctoral student Peter Garland warned that Musk’s service, which began in 2019 and uses 6,000 low earth orbit satellites, could turn into a foreign-owned Trojan horse. “What happens, for instance, if the man with the On/Off switch and control over the LEO technology stack were to object to, for instance, CRTC regulations?”

The Carleton report is eagerly awaited every year for its wealth of valuable data and critical analysis, and it is especially refreshing in an era of media data suppression and manipulation in Canada.

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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