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Ottawa extends, doubles news media bailout

Liberals throw more money at media in wake of Online News Act fiasco

Canadian PoliticsMedia Canadian Business

You really have to hand it to the suits at News Media Canada, who have pulled yet another lucrative rabbit out their hat by persuading Ottawa to not only extend its five-year $595 million bailout for two more years, but to more than double its allowed payout per journalist. The Liberal government’s Fall Economic Statement released last week included another $129 million for news media and raised the limit per subsidized journo from 25 percent of a maximum $55,000 salary, or $13,750, to 35 percent of a maximum $85,000 salary, or $29,750. This cash injection likely avoids disaster in the wake of the government’s ill-advised Online News Act, which was passed this summer in the hope of forcing digital giants Google and Meta to subsidize the country’s dying newspapers to the tune of $329 million annually. Meta instead blocked news in Canada on its Facebook and Instagram social networks, and Google is almost certain to follow when the act comes into force next month. NMC lobbied relentlessly for it, including by running blank front pages for a day on newspapers published by the country’s two largest chains, Postmedia Network and Torstar, and also by spiking contrary columns. With their hopes of a big payday going down the drain, they switched to the tried and tested method of simply begging for more taxpayer money.

The newspaper industry association has gotten good at lobbying since going pro recently. It used to be run by journalists, usually senior executives at its member publications, who did their best to make their case to Ottawa in meetings with ministerial aides and bureaucrats. In the run-up to the 2019 news media bailout, for example, Postmedia CEO Paul Godfrey reportedly visited the capital for no fewer than 41 meetings with functionaries. NMC could rarely breach the inner sanctum of cabinet ministers, much less the prime minister, until it hired professional help. It had asked for $1.375 billion over five years, but Ottawa rejected that gambit. “Our approach will not be to bail out industry models that are no longer viable,” then-Heritage Minister Mélanie Joly. “Rather, we will focus our efforts on supporting innovation, experimentation and transition to digital.”

That didn’t last long after NMC brought in the big guns, hiring Isabel Metcalfe, who a few years earlier had been named the second-most powerful lobbyist in Ottawa. The Liberal insider quickly broke through, according to Blacklock’s Reporter, which obtained documents that showed Metcalfe had held 79 meetings with senior officials in just a few months, including with the Prime Minister’s Office. They included with Joly and her successor, Pablo Rodriguez, 13 deputy and assistant deputy ministers, five with the PMO and eight with the Department of Finance. The bailout, which expires next spring, was soon announced.

It has failed to preserve Canada’s crumbling press, according to Blacklock’s, and has mostly succeeded in enriching the US hedge funds that own somehow own 98 percent of Postmedia Network, the country’s largest newspaper chain, despite our supposed 25 percent limit on foreign ownership. As I show in my book The Postmedia Effect, the company which publishes 15 of the country’s 21 largest dailies must send south about $30 million a year in payments on its massive debt, which is also held mostly by the hedge funds. They have taken about $500 million in debt payments out of the company since acquiring it in 2010, and are rapidly dismantling it by closing newspapers and selling off real estate. The company’s profits, as I show in my book, fell last year to a point where they can no longer service its debt, so it is now being kept alive by government handouts. Torstar was taken over in 2020 by a private equity firm that has been similarly dismantling the company using questionable tactics.

NMC was fronted until 2021 by Winnipeg Free Press publisher Bob Cox, who retired and was replaced by Paul Deegan. He had no previous background in journalism aside from authoring the occasional opinion column as a public relations consultant. Deegan instead began working in US politics after graduating from the University of Toronto in History and Political Science, interning in the office of Senator Ted Kennedy before joining the National Economic Council as its deputy executive director from 1993-96. He returned to Canada as a policy advisor for the Bank of Montréal, where he stayed for almost 20 years, rising to the position of vice president of government and public relations before joining CN Rail in the same position from 2015-18. He became a director in 2009 of the Canadian Journalism Foundation, which hosts an annual awards gala but, as Eric Reguly of the Globe and Mail quipped in 1996, has “more to do with lobbyists and PR than journalism.” Reguly’s exposé ended with a cryptic warning: “Beware of lobbyists and PRs. They’re reproducing like rabbits, they’re gaining power and they’re about to spin a story that affects you.” He could have been talking about Deegan.

It was after he struck out on his own and founded a corporate communications consultancy in 2018 that Deegan seemed to take a serious interest in journalism, writing regular op-eds for major newspapers, often co-authored with his former BMO colleague Kevin Lynch. Perhaps it was his 2018 column in the Toronto Star headlined “Journalism too important to go the way of the video store” that caught the eye of NMC. “As journalism goes, so goes democracy” it began, parroting the CJF slogan which if true means we are all in big trouble. Deegan has been busy writing op-eds on behalf of NMC ever since he was hired as its president and CEO in 2021, many of which were co-authored at first with Jamie Irving, scion of the New Brunswick news media monopoly that Postmedia swallowed in 2022. Irving was briefly chair of Postmedia’s board of directors along with that of NMC before mysteriously resigning almost as soon as the Online News Act was passed in June. A search of the database Canadian Newsstream shows Deegan’s byline on more than 300 opinion articles and letters to the editor in Canadian newspapers authored in little more than two years as head of NMC. He has also been busy lobbying Ottawa, recording no fewer than 69 registered lobbyist meetings in the past year alone.

Deegan’s silver-tongued sophistry has obviously paid off nicely for NMC, but not so much for Canadians whose newspapers have been transformed into a permanent ward of the state. It’s like Reguly said of lobbyists—they’ve gained power and they’ve spun a story that affects you.

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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