What a difference a week makes on the Canadian media rollercoaster. The last time we were able to watch the long-running soap opera that has been Bill C-18, the Online News Act, Google and Meta were threatening to block Canadian news from their platforms and Prime Minister Trudeau was comparing Ottawa’s battle with Big Tech to defending democracy during the Second World War. Unusual trading in Postmedia Network shares had prompted the country’s largest newspaper chain to announce that it was in merger talks with Nordstar Capital, owner of the Toronto Star and the country’s second-largest newspaper chain. Canada’s media seemed to be imploding in real time.
All parties then imposed radio silence as talks went on behind closed doors between Ottawa and the digital giants it has been trying to strong-arm into subsidizing Canada’s faltering news media. Most newspapers, however, continued to vilify Google and Facebook, as they have for more than a year in campaigning shamelessly for Bill C-18, while some even began attacking those who dared to agree with them.
The Victoria Times Colonist, however, warned that what was coming down could be nothing less than a “catastrophe” for Canadian news. The Globe and Mail, which had been having sober second thoughts about Bill C-18 for months, questioned the government’s “flawed logic” in interfering with the free market to rescue media companies from what it called “the ravages of the digital revolution.” It concluded that “there are clearly better ways of supporting Canadian media than the mess of Bill C-18.”
Negotiations also continued quietly in the boardrooms of the courting newspaper giants as pundits gnashed their teeth at the “disaster” that could result from one company owning three of Toronto’s four dailies and 18 of the country’s 21 largest English-language newspapers.
Then in the space of 24 hours, the threat level suddenly plunged several notches this week. First Postmedia and Nordstar announced on Monday that “regulatory and financial uncertainty led them to make the decision to end their negotiations.” Competition Bureau head Matthew Boswell may have made it clear to the chains that such a calamitous combination for Canadians would attract major pushback from the federal regulator which might take years to resolve. As implausible as it might seem given the Competition Bureau’s recent inability to prevent even the most flagrant of monopolies, it could be one last desperate stand Boswell might be prepared to make in a bid for more—or any—enforcement powers.
Postmedia in particular has no time to waste. It has what are likely months or even just weeks to solve its debt crisis, which for more than a year has seen its majority shareholder, Chatham Asset Management of New Jersey, forego payments on its massive debt, which the hedge fund also holds and has been bleeding the company dry with since 2010. A merger with Nordstar might provide Postmedia with more life support after Ottawa’s $595 million industry bailout expires next spring, but it could also eventually drag them both under. Allowing Postmedia to go bankrupt and then helping its newspapers to continue publishing pending a reorganization might be a better option for Canadians.
According to the Globe and Mail, sources told it that “Nordstar executives were concerned with Postmedia’s debt structure, even though Postmedia’s lenders were planning to swap the majority of the company’s loans for equity.” That would raise the thorny issue of Canada’s supposed 25-percent foreign ownership limit on newspapers, as US hedge funds already own 98 percent of Postmedia shares, with Chatham alone holding 65 percent. The limit was ignored when Postmedia scooped up the former Southam newspaper chain out of the bankruptcy of Canwest Global Communications, but that was under a Conservative government.
Then on Tuesday, the Heritage ministry posted an online update to the regulations it plans to enact under Bill C-18, which would “establish a financial threshold for contributions to sustainability of the Canadian news marketplace.” It became instantly obvious that Ottawa had blinked in the wake of Meta’s threat to stop allowing Facebook and Instagram members to post links to Canadian news stories on those platforms, which it estimates to be worth $230 million in traffic, and to cancel the million of dollars in support it already provides to Canadian news media. Google also said it was considering similar moves.
In a transparent effort to salvage existing support from the platforms, the government’s update confirmed that “non-monetary offerings to news organizations, such as training or other products,” would be included in taking account of the contributions that the digital platforms make to Canadian media, as would agreements they have already reached with news businesses.” As one pundit noted, it was like the government “opening negotiations on the terms of its surrender.”
After all the bravado from Trudeau and Heritage Minister Pablo Rodriguez, who held a press conference last week to defiantly announce that the federal government would pull its $11 million a year in advertising from Facebook and Instagram, Ottawa folded like a cheap tent on a long weekend. The insignificance of the government’s retaliation, after all, amounted to nothing more a rounding error in Meta’s massive revenues, and its hypocrisy was confirmed when the Liberal Party admitted it had no plans to follow suit.
Then there was the verdict delivered by the people themselves, who exercise their power in our democracy not so much at the election booth as via opinion polls, to which politicians pay close attention. A new poll by Angus Reid showed conclusively that the government’s hard line didn’t cut much mustard with most Canadians, but the threat to remove news from their Facebook feed or Google searches did. About half of those polled said the government should back down in its battle with Big Tech, while only about a quarter said Ottawa should stand firm. The poll also arguably showed that most Canadians have finally started to see through the one-sided propaganda they have been inundated with on this issue, some of which has been quite nasty.
The only remaining question seems to be how much support Ottawa was able to extract from Google, and whether it will be able to persuade Meta to even stay in the Canadian news circulation business. Facebook has been busy exiting the news sector worldwide since last year, which should have told Ottawa that it wasn’t bluffing. Liberal and NDP members of the Heritage committee that held hearings on Bill C-18 last fall instead subjected its witnesses to a “vile” grilling, in the words of one Conservative member. Whether that relationship can be repaired is questionable.
The battle over Bill C-18 is hardly over, however, as the Heritage ministry has to post whatever regulations it comes up with and then conduct a public consultation in which “stakeholders, interested groups, and Canadians will have an opportunity to comment on the proposed regulations.” That should all play out by the end of the year, providing much more opportunity for continued outrage, posturing, polling and propaganda.
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.