Canada’s chief media apologist sings the blues (to an American)

Ken Goldstein dropped by the Poynter Institute recently. Who knows what he was doing in St. Petersburg, Florida. Maybe he was on vacation. After all, it’s c-c-cold this time of year in Winnipeg, where Goldstein lives. Or maybe he was there at the behest of a client. His firm Communic@tions Management Inc., according to its website “provides consulting advice in media economics, media trends, and the impact of new technologies on the media.” FULL DISCLOSURE: Goldstein and I have locked horns before, on the letters page of the Vancouver Sun way back in 2002. He was then executive vice-president and chief strategy officer of Canwest Global Communications, which owned the Sun and most of the other major dailies in Canada. That was before its leadership ran Canwest into bankruptcy, forcing Goldstein to hang out his shingle as a consultant. Back then my complaint was about a Sun column Goldstein wrote headlined “Newspapers’ dwindling role belies fears about monopolies,” in which he argued that Canwest’s overweening influence was nothing to worry about. You can see from the correspondence that Goldstein made sure he got the last word back then. That won’t happen now that I have a blog.

Ken Goldstein -- Canada's media "expert"

Down in St. Petersburg, Goldstein got the ear of Rick Edmonds during his visit to Poynter’s campus. (Endowed by the late Nelson Poynter in the 1970s, the Poynter Institute runs journalism education programs, does much journalism research, and also publishes the St. Petersburg Times.) Edmonds is a media business analyst for Poynter and he co-authors its excellent annual State of the News Media report. So he’s fairly influential. You can see why Goldstein might want to tell him all about the woes of Canadian media, or at least his (or his latest client’s) version of them.

And what a tale of woe Goldstein spun. Postmedia Network, the consortium of mostly U.S. hedge funds that took over the former Southam dailies after Canwest went bankrupt, has been dealt a “nasty” hand. A faltering economy and falling Canadian dollar have made it tough on the company because its enormous debt is payable in U.S. dollars. No mention of that fact that much of its high-interest debt is held by those very same U.S. owners, plus a Canadian hedge fund that financed most of Postmedia’s $316-million purchase of 175 newspapers from Sun Media. These hedge funds are sucking the company dry as a result, all the while complaining about how tough times are.

According to the headline on Edmonds’ account of what Goldstein told him, “business model woes are running off the charts” up here as far as media companies are concerned. Things are so bad for Postmedia that it has been forced to implement “waves of layoffs and consolidations, some of the most draconian this January.” No mention of the contentious newsroom mergers at its dailies in Vancouver, Calgary, Edmonton, and Ottawa, which have now prompted federal hearings. No, the way Edmonds understood it from Goldstein, the newsrooms in those cities were “nearly halved and asked to produce separate reports for the two titles Postmedia owns in each market.” Well, that sounds a lot better than newsrooms being merged.

Government, according to what Goldstein told Edmonds, is a “complicating factor” in Canadian media, what with the state-owned broadcaster CBC providing competition for the private sector. “And a Competition Bureau regularly considers whether to rein in concentration at the biggest chains.” Yeah, then it lies down until the feeling passes. Some complication.

This promotion of the woes besetting newspapers in Canada is nothing new for Goldstein. Last summer, mere weeks before after Postmedia bought the Sun Media dailies (surely just a coincidence), Goldstein issued a dire warning. By simply projecting current trends to continue downward (which rarely happens), he predicted that within a decade “there will be few, if any, printed daily newspapers” left in Canada. Edmonds also picked up on that “expert” forecast. Except that such predictions were rampant in the U.S. following the collapse of newspaper classified advertising there during the 2007-09 recession. Among major dailies, only a flagging few folded. No major newspaper in North America has ceased publication since 2009 despite all the dire predictions, as I chronicle in my 2014 book Greatly Exaggerated: The Myth of the Death of Newspapers. The biggest threat is not so much to newspapers, which from the company financials I have examined are still profitable. The threat is to companies like Postmedia which own newspapers but are heavily loaded with debt which they may soon have problems paying off if their revenues keep falling. Newspapers are remarkably resilient, as has been amply demonstrated, because they can quickly downsize by cutting staff and other costs. They will thus continue publishing. They may have different owners, however. In the case of Postmedia, that would be a blessing.

But wait, it gets better . . . I mean worse. Things are just as bad in Canadian television, according to what Goldstein told Edmonds. “TV stations in Canada are in roughly the same bad shape as newspapers. . . . Canadian local stations don’t have the saving grace of huge political advertising revenues and rising retransmission fees, which have kept TV so prosperous here.” No, we actually didn’t have a federal election last fall, with lots of advertising on TV. And remember those retransmission fees, which the networks campaigned so hard a few years ago to get the government to force the cable and satellite companies to pay them? As I chronicle in this article, it took the networks several tries, and a barrage of “Save Local TV” commercials, to get the right to negotiate retransmission fees. They sang the blues, claiming they were losing hundreds of millions of dollars, except that they weren’t, as one enterprising blogger discovered. But almost as soon as they won the war, the networks were taken over by those very same cable and satellite companies that were making even more money than the networks. This is the disastrous legacy of convergence, which 16 years ago saw newspaper and television companies frantically partner in a fruitless quest for ever-greater profits. Since it all collapsed, CTV is now owned by Bell, Global by Shaw, and CITY by Rogers.

But here’s my favorite line from Edmonds’ account of his meeting with Canada’s media guru. “Goldstein told me that the four private stations in his home town of Winnipeg have collectively lost money each of the last nine years.” I think this one proves the old saw about how to lie with statistics. I am surprised to hear that there are four private stations in Winnipeg, as we only have three private networks, so I suspect there is a cable access channel in there bringing down the average. If you instead prefer hard data, as I do, luckily the CRTC keeps a close eye on broadcasting company financials. You will see from its latest annual monitoring report that the television networks are doing quite nicely.

So, keep it up Ken. You’re doing a great job of twisting the facts to the advantage of Canada’s bloated media companies. Good thing nobody’s watching.