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How to fund journalism in Canada if Google, Facebook won’t

If tech firms don’t want to fund Canadian media and Ottawa won’t keep bailing it out, where will the money come from?

Canadian PoliticsMedia Canadian Business

Canada can fund news media without robbing Google and Facebook, but it will involve clawing back some of the monopoly profits being raked in by our giant telecom companies. Photo from Flickr.

It is increasingly obvious that the pot of gold Canadian media expected to find at the end of the digital rainbow is quickly vanishing. Facebook is already on record as threatening to quit the country if required to pay for carrying links to news stories. Google did just that in Spain for eight years. Now the US equivalent of our Bill C-18, the Online News Act, has suffered a serious setback and may never get off the ground. Americans take freedom of speech much more seriously than we do, which is why they enshrined it as the First Amendment to their Constitution.

Meanwhile, the Parliamentary Budget Office revealed recently that three-quarters of the estimated $329 million a year that Bill C-18 would extract from the digital giants—should they agree to pay—would go not to needy newspapers or online start-ups but to broadcasters. The latest curveball came with an amendment that would welcome aboard the gravy train media outlets that don’t even produce news, such as campus radio stations. Then there is US concern over our attempts to tax and regulate their companies in both Bill C-18 and Bill C-11, the Online Streaming Act, which would affect firms like Netflix, Disney, and Amazon.

Despite Bill C-18 looking more and more like a lost cause, it will now go for third reading in January, after which it will go to the Senate for approval. The upper chamber may have other ideas, however, and may even call a halt to the process so that a major re-think of Canada’s news future can be undertaken, as some are suggesting.

Last week I floated the idea of UK-style “democracy reporters” covering local government and promised to lift the lid on an easy source of funding for news in the form of monopoly profits that the biggest media in Canada have been jealously guarding for years. The bailout money that Ottawa has been providing our news media has so far come from government coffers. The 2018 Local Journalism Initiative allocated $50 million over five years to report on under-served communities and was just extended for another year, with another $40 million over three years thrown in as Special Measures for Journalism. The 2019 media bailout of $595 million over five years is being doled out as tax credits and will be expiring soon, thus the urgency to make Google and Facebook a piggy bank for our news media.

The tax credits idea was devised at the behest of Rogers by media consultant Richard Stursberg, a former head of CBC English who told the bailout tale in his 2019 book The Tangled Garden. The mandarins in Ottawa did not like the idea of tax credits, according to Edward Greenspon, head of the Public Policy Forum think tank and a former editor of the Globe and Mail, who in early 2017 was working on a bailout proposal with Stursberg and the newspaper industry group News Media Canada. “He continued to report that there was no sympathy for tax credits,” wrote Stursberg. “The boffins at finance hated the tax credits that already existed and wanted nothing to do with extending them to newspapers.”

Greenspon had earlier that year authored a report titled The Shattered Mirror for Heritage ministry hearings chaired by Liberal MP Hedy Fry on Media and Local Communities. His report recommended a government fund to support “civic function journalism,” or coverage of democracy, but the newspaper bosses much preferred Stursberg’s idea of tax credits. “First, they objected to the idea of a fund that they would have to apply to,” noted Stursberg. “Second, they found the concept of ‘civic journalism’ too limiting.” In the end, they decided to propose both ideas when they met with senior government officials that April. ”If the mandarins really hated tax credits, then better the fund than nothing,” recalled Stursberg. “As one of the publishers said to me, ‘At the end of the day, if the money has to be delivered in a brown paper bag late on Sunday nights in the alley, we’ll take it.’”

The newspaper lobby, of course, got the tax credits they wanted. Those will be running out soon, however, and if Google and Facebook don’t want to fund Canadian media and Ottawa doesn’t want to keep bailing it out, where will the money come from? Well, believe it or not, there’s another pot of gold at the other end of that digital rainbow which Fry’s report recommended should be accessed to fund news provision. There’s no danger of it flying away any time soon, either, as Ottawa helped put it there and requires Canadian media consumers to contribute to it regularly. I’m talking about the government-sanctioned monopoly profits that Canada’s giant telecom companies make for hooking us up to internet access at usurious rates, which generate profit margins of about 45 percent.

Ottawa has since 2010 required the telcos to contribute five percent of their cable and satellite revenues to fund Canadian film and video content through the Canada Media Fund, which doles out about $750 million a year. More and more Canadians, of course, are “cutting the cord” and ditching high-priced cable in favour of streaming video. For that, however, they still need internet access, for which the telecoms charge among the highest rates in the world with Ottawa’s blessing. While our news media are dying on the vine, revenues of internet service providers rose by a billion dollars last year to a cool $14.3 billion, according to last month’s report on Canadian media finances out of Carleton University.

The Fry report on Media and Local Communities recommended expanding the Cancon cable TV levy to include ISPs, which based on last year’s take would provide $715 million annually and still leave the telcos with 40 percent profit. That would fund an enormous amount of quality online content. Fry’s idea never got off the ground, however. In a time-honoured tradition, her report was leaked to the press and the recommendation spun as a “tax” on consumers rather than a levy to claw back monopoly profits. The plan was quickly shot down by Prime Minister Trudeau when it was put to him by reporters in Montréal less than an hour after the report was released. “We’re not going to be raising taxes on the middle class through an internet broadband tax,” he said.

Canada has been described as “three telcos in a trenchcoat” for the inordinate power they wield. They control all of the private TV networks, as Bell owns CTV, Rogers owns City, and Global is owned by the Shaw Family Living Trust. Giving back some of their monopoly profits to benefit Canadians is the second-last idea they want to hear. The first? Free public wifi.

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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