At the very moment of the pandemic when Canadians need news professionals for information and answers, the media industry is itself threatened by an unprecedented financial crisis.

 

Edward Greenspon

May 8, 2020

Canadians want a fire department of news – a dependable system they can ignore most days yet will still rush to the rescue when they smell smoke. But who will pay?

At focus groups I attended for The Shattered Mirror report, participants revealed how they generally accessed their news on Facebook. And then someone would invariably interject, “Unless it’s important.”

The moderator asked what they meant. ‘Well, I can’t count on my friends and family to understand when something important happens,’ or ‘I mean (laugh) Facebook doesn’t have any reporters to find out what’s happening.’

In those moments, they said they turned to mainstream media – local news sites, individual columnists, national TV news anchors and the like. On an average day, they might tune out.

When matters important to them were in play, they preferred professional journalists and trusted organizations over hobbyists or algorithms.

Either way, they definitely didn’t want to pay.

Perhaps you’ve noticed there’s a five-alarmer out there? A public health crisis passes the ‘important-to-me’ test – and so good journalism has become mission critical. Can you go to the park while social distancing? How does that wage subsidy plan work? What’s with immunity and a vaccine? When can we get back to work? Why are golf and hair the first back?

Even antagonistic politicians have taken to praising the news media as an essential service. But the object of their affection is exhibiting a worrisome cough and fever. With consumers confined to their homes, ad revenues are down 50 percent and
more at many news organizations.

The last big recession marked the beginning of the unspooling of news industry revenues, starting with newspapers and spreading beyond. Until 2008, Canadian dailies generated a combined $2.5 billion in ad sales. It fell 17 percent the following year. By 2018, the take had fallen to $946 million.

Will this recession prove the tipping point? Eight weeks into the crisis, 70 papers across the country already have temporarily or permanently closed or suspended print editions. Two thousand jobs are gone. The hundreds of free community newspapers and local broadcasters dotting the national landscape, lacking subscription revenue, are the most vulnerable. The crown jewel of Quebec journalism, La Presse, is reportedly seeking a government bailout. Just 9 percent of Canadians report paying for online news, according to the Reuters Digital Institute, so revenue is squeezed for subscriber models, too.

And so at the very moment journalists are reminding us of their enormous social value, they are approaching endangered species status.

What can be done? What should be done? For starters:

• Finally eliminate the absurdity of foreign digital giants enjoying more favourable tax treatment than Canadian media. What’s good for Netflix (and Facebook, Google and nyt.com) is not necessarily good for Canada.
• Activate last year’s $595 million journalism package to relieve the crisis pressures piled on the ongoing decline. The labour tax credit promised in the 2019 federal budget hasn’t paid out a cent yet. The assessment process is yet to begin. Speed over perfection is the new normal. Spend an afternoon approving the 95% of easy cases, get their 2019 payment out the door and claw back any excess later. And treat digital-only equally.
• As soon, as 2019 payment are issued, front-end 2020 disbursements. This would represent an advance on budgeted funds, not new money. Publishers need cash now; closures will mushroom once emergency wage subsidies expire.
• Increase the labour credit’s salary ceiling from an arbitrary $55,000 to actual bargaining unit figures.
• Raise the subscription tax credit from 15 percent (too paltry to sway consumers) to 50 percent. The news media needs subscribers and readers need a viable news media.
• Expedite the process according charitable status to journalism. As PPF wrote in ‘What the Saskatchewan Roughriders Can Teach Canadian Journalism,’ the news ecosystem of the future will be more community-based and feature more non-profits. Let’s enable philanthropic foundations to help out.

Finally, get in touch with Australia and France about recent initiatives under competition laws requiring search engine and social media companies to negotiate payments for original news content. In The Shattered Mirror, PPF recommended a system (modeled on the long-standing cable levy) that would transfer funds from platform companies that profit from digital advertising and don’t invest in journalism to those covering on the goings-on of our democracy.

Canada has already staked out an international leadership position on arm’s length measures to preserve journalism. Let’s turn next to working with like-minded nations to establish better balanced arrangements between innovative digital distribution platforms and indispensable news gathering operations.

If you want a fire department at the ready, someone has to pay.

Edward Greenspon is President & CEO of the Public Policy Forum, author of “The Shattered Mirror: News, Democracy and Trust in the Digital Age” and former Editor-in-Chief of The Globe and Mail.