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Rule #1: Canada’s media bosses always get what they want

Their sorry track record shows that these money-making schemes deserve closer public scrutiny

Media Canadian Business

A Rogers store offering services from Rogers Wireless. Photo from Wikimedia Commons.

The recent government approval of the Shaw purchase by Rogers Communications confirms a seeming iron rule in this country: our media bosses always get their way, no matter how disastrous the consequences might be for Canadians. As a result, Canada’s “Three Telecoms in a Trenchcoat” are now two and can feast like never before on some of the world’s highest rates for cable, Internet, and cell phone service.

A generation ago it was multi-media convergence, which Canadian academics lined up to support. It soon left Canada’s news media in ruins, however, and as a result vulture capitalists are now picking over their bones. A half-century ago it was ownership concentration, which successive inquiries warned could create a force more powerful than even government. Anti-trust regulators could not control it, however, as their best efforts were rejected by the country’s courts, which is where the ultimate national power lies.

Now it’s bailouts, first directly from government and in Big Media’s latest scheme by trying to persuade Ottawa to force thriving digital platforms like Google and Facebook to share their revenues with them by passing Bill C-18, the Online News Act. A five-year $595-million government bailout the government announced in 2018 runs out this year, so for lack of a viable online survival strategy, our news media now desperately need to find an alternative income source.

The problem is that the often-disastrous outcomes of these schemes inevitably come at the expense of ordinary Canadians, who not only pay outrageously high rates for telecom services but are now likely subjected to as much propaganda as any people on earth. The sad fact is that the long-running campaign to make the country’s media ever-larger has always worked, even if their schemes to make it more lucrative have sometimes backfired spectacularly.

At the millennium it was the supposed miracle of multi-media “convergence,” which through the synergy of combining print media content with video delivered online was supposed to be the way of the future. The AOL-Time Warner merger that went down just as 2000 dawned married new media with old, even if new media got a bigger share due to their over-inflated dot-com valuations. Canada’s private TV networks soon hooked up with the country’s biggest newspaper chains, but some worried about a dilution of news quality, so the CRTC sought a firewall of editorial separation.

The media, however, produced academics to promise how great unregulated convergence would be. “One of the things that has always disturbed me about journalism in Canada is that there were too many reporters chasing so few stories,” testified Donna Logan, founding director of the UBC School of Journalism. “Converged journalism offers an opportunity to break out of that mould by freeing up reporters to do stories that are not being done and are vital to democratic discourse.”

By then Canadian media were powerful enough to get their own way on just about anything. The last best chance to rein in their power came with a Senate inquiry in 1970 and the Royal Commission on Newspapers in 1980. The Senate report warned that the ever-tightening grip on media ownership could lead to the news being “controlled and manipulated by a small group of individuals and corporations whose view of What’s Fit to Print may closely coincide with… What’s Good For Business.”

Then the courts stepped in to do their part. Oil baron K.C. Irving of New Brunswick, who owned all five of the province’s dailies and most of its radio stations, was actually convicted of monopoly in 1972, fined $150,000 and ordered to sell two of the dailies, but it was overturned a few years later by the Supreme Court of Canada. It ruled that anti-trust regulators had to prove a present detriment to the public, not just a hypothetical future detriment.

The Royal Commission was called by Prime Minister Pierre Trudeau in 1980 after the country’s two biggest chains folded dailies in Ottawa and Winnipeg, giving each other one more new monopoly. A change in government to Conservative a few years later ruined any chance of following its recommendation of breaking up the chains, and by the 1990s Canada had the world’s most concentrated media ownership. A raid of the chains caught one Southam executive tearing up a memo that laid out the plan for local news media dominance. “They get out of Ottawa. They get out of Montréal. They get out of Vancouver. They get control in Winnipeg.” Charges of conspiracy and monopoly were laid in Ontario Supreme Court, but a judge found the arrangement “good business sense, not an illegal conspiracy.”

A switch from criminal law to civil procedures with the 1985 Competition Act was hoped to better slow down media merger mania, but the Competition Bureau it created has proved impotent seemingly by design. It now just waves through news media mergers, hamstrung by the Sec. 96 “efficiencies” defence in its enabling Act.

The majority owner of Canada’s largest newspapers is now a New Jersey hedge fund which is bleeding them dry by also holding the bulk of their enormous debt. One advantage for the hedge fund is Ottawa’s willingness to continually bail out failing industries, as the CBC noted in 2019 that government subsidies for business exceed the country’s entire defence budget.

The $595 million bailout announced in 2018 has helped the vultures to collect another $150 million in interest payments over the past five years they have been able to continue feeding off our news media’s dying corpse. Ordering Google and Facebook to give them money would keep the shell game going even longer, perhaps indefinitely.

The only problem with this scheme is that Google and Facebook are apparently not prepared to be used as a piggy bank by our country’s news media. Facebook has announced that it will stop allowing its members to post links to Canadian news stories to avoid having to pay for the privilege. Google has been preparing to do the same.

The irony is that news media benefit greatly from the readers that Google and Facebook send them. “If anything, evidence (and lots of it) shows that, overall, news outlets would be in worse shape without these digital platforms,” concluded Queen’s University economist Gil Ricard, who studied the eight-year shutdown of Google News in Spain after it enacted a similar link tax. “Spanish news outlets experienced a reduction in the number of daily visits of between eight and 14 per cent,” noted Ricard. “To add insult to injury, advertisers stopped placing ads on their sites, causing a collapse in ad revenues.”

Newspapers in countries which have not bailed out their news media are successfully adapting and transitioning to hybrid digital publications by erecting paywalls that require regular readers to pay for online subscriptions. Further enabling the American vultures who have our news media in their clutches will not only delay the transition here, but perhaps also lessen its likelihood of success. Allowing them to continue to feed off government handouts while riding down the flaming jetliner of Canada’s news media will inevitably lead to a crash landing.

Doing so by letting them stick up Google and Facebook is bound to backfire when the digital giants flee the country instead, leaving Canadians again holding the bag for our news media’s hare-brained schemes.

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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