Newspaper chains demand ransom from Ottawa

Canada’s largest newspaper chains seem locked in a bizarre standoff with the federal government, demanding financial assistance while killing off community newspapers as if they were hostages. A major round of executions came almost a year ago, when Postmedia Network and Torstar Corp. traded 41 mostly Ontario titles and closed 37 of them. The occasion of “Newspaper Week” saw Torstar chair John Honderich author a column on Tuesday that resembled nothing less than a ransom note. 

Under the headline “Where is Ottawa’s help for Canada’s newspapers?,” it listed 25 defunct dailies and 112 closed community newspapers for a total of 137 titles that have ceased publication in the past decade. Honderich wanted to know where the money is that Ottawa promised in February’s budget to assist Canadian journalism. “One or two exploratory talks have been held but there has yet to be even a request for proposals,” he groused. “Maybe next year, we are told.” 

On closer inspection, however, Honderich’s list of dead papers doesn’t pass the laugh test. It includes more than a dozen titles Torstar killed off after its swap last year with Postmedia, and almost two dozen more it sent back the other way to be euthanized. Executives of both companies swore up and down they had no idea the other planned to close the newspapers they traded, but their denials were never convincing. The Competition Bureau soon came knocking with search warrants issued as part of its investigation on rare criminal charges of conspiracy. Documents submitted to the Ontario Superior Court to obtain the search warrants detailed a written agreement dubbed “Project Lebron” after the basketball star. In them, Postmedia and Torstar reportedly agreed not to compete for years in the markets they vacated and even on the almost 300 workers who would get the axe. The companies and their executives are now facing the possibility of charges that could bring $25 million in fines and 14 years in prison.

Two dozen more community newspapers on Honderich’s list were B.C. titles closed or merged this decade by Black Press or Glacier Media. The provincial chains provided the template for Postmedia and Torstar by trading almost three dozen titles between them from 2010-14, then closing most of them to eliminate local competition. Of the 13 paid circulation dailies lost in Canada from 2010-16, nine were killed by Glacier or Black Press (no relation to Conrad). Their dealings somehow avoided the Competition Bureau’s notice, perhaps due to them being out of mind way out on the west coast. This no doubt emboldened Postmedia and Torstar, who may still be able to use the regulatory inaction as a precedent to allow their collusive closures.

Honderich’s list of defunct dailies also includes a number of freebies that once littered our porches and transit stations unbidden, such as the Peace Arch Daily News in tiny tourist town White Rock, B.C., which briefly circulated 3,700 copies from Tuesdays to Fridays before retreating to twice weekly publication in 2014. Nine were commuter dailies which proliferated a dozen years ago under the successful model pioneered worldwide by Swedish company Metro International. Metro editions sprang up from coast to coast in Canada in partnership with Torstar, which recently rebranded the survivors StarMetro. Quebecor responded by launching 24 Hours papers in numerous cities and now-defunct Canwest countered with its short-lived but hilariously titled Dose. The model has been in retreat everywhere since the bursting of the print advertising bubble a decade ago left room for only one in each market. Last year Torstar traded Metro Ottawa and Metro Winnipeg to Postmedia and got back 24 Hours Toronto and 24 Hours Vancouver, all of which were closed. Yet according to Honderich we are supposed to lament their passing, along with those of 24 Hours Calgary, 24 Hours Edmonton, Metro London, Metro Regina and Metro Saskatoon, as some great loss to democracy. Puh-lease.

Honderich’s count of 112 closed community newspapers at least comes with names, unlike others who have come up with inflated totals by using the questionable research method of “crowdsourcing.” It almost seems like an industry campaign to railroad Ottawa into a bailout. But for those who have studied Canada’s newspaper industry intently, a bad odor emerges. “This is such a distortion of facts that it isn’t funny,” blogged Ontario author Alexandra Kitty in response to Honderich’s list. A former community newspaper journalist and author of the brilliant new book When Journalism Was a Thing, which is a compendium of corporate crimes against the craft, Kitty knows from personal experience that most of the defunct small-town newspapers hardly churned out quality journalism.

The stories in those local newspapers were happy, happy soft news junk. It is not as if local papers were in the habit of uncovering real items. They covered photo ops of local corrupt politicians. They never bothered pointing out the open affairs they were having and how they rewarded their mistresses with patronage appointments, for instance.

But what Honderich and others who inflate the magnitude of Canada’s newspaper shakeout ignore is that not only do they close, but in the normal course of events they start up as well. The annual count kept scrupulously by the Canadian Community Newspaper Association shows there were only 10 fewer titles last year than there were in 2011, before which it counted only its member titles. The total fluctuated considerably in between, however, as community newspapers tend to come and go. 

                 Community newspapers in Canada

	Titles	Circulation (weekly)
2017	1,032	18,802,329
2016	1,060	19,454,115
2015	1,083	20,973,352
2014	1,040	20,577,994
2013	1,019	19,612,930
2012	1,029	19,736,168
2011	1,042	19,312,842

At least, they tend to come and go unless you allow corporate collusion and non-compete agreements. Then they only go away, along with competition.

Media change denial is not like climate change denial

Rasmus Kleis Nielsen provocatively assails those he calls “media change deniers” by comparing us to the natural scientists who, despite overwhelming evidence, refuse to go along with the consensus on global warming. The insulting inference is that those of us who take a contrary view from the mainstream of media researchers are similarly – as the illustration which accompanied his polemic on the NiemanLab website reinforces – deaf, dumb and blind. NiemanLab has refused to run my reply, which is why I post it here. The gist of Nielsen’s argument is that those who swim against the current should refrain from making assertions without data to support their positions. By doing so, he asserts, they are “doubling down on arguments that are directly contradicted by a growing consensus in the best available peer-reviewed scientific research.” He then adds parenthetically: “Don’t get me started on whether print ‘has a future’ or the notion that linear scheduled television is doing just fine.”

If you can't sufficiently insult dissenters with words, try using pictures like this

As I have done no research on linear scheduled television, I will focus in answering Professor Nielsen on whether print has a future. I submit that he needs to get out from under his own filter bubble and consider data-based, peer-reviewed research of which he is either unaware or perhaps simply ignores because it contradicts his cocksure consensus. I would argue that considering different types of data is important in researching a question in order to get different perspectives and thus a better grasp on it.

Take the future of print. The overwhelming consensus, of course, is that print is dying. Even supposedly skeptical scholars assume as much simply from reading headlines that tell of falling newspaper circulations, multi-million-dollar corporate losses, mass layoffs of journalists, and even the bankruptcy of numerous newspaper chains. Failing to understand how the newspaper business works, and having no inkling of the arcane rules of accounting, they neglect to look under the hood to diagnose what is really going on. That is what I did for my 2014 book Greatly Exaggerated: The Myth of the Death of Newspapers, (PDF) which was based on data published that same year in the peer-reviewed and A-ranked Newspaper Research Journal. (PDF) I’ve had lots of reviews written of my books, but never before one of a journal article I had written. The European Journalism Observatory took note of this one, but perhaps that didn’t register in the hallowed halls of Oxford, where Nielsen is Director of Research for the Reuters Institute for the Study of Journalism. I even took them a copy of my book the last time I was in town, but I guess it somehow fell through the cracks.

I looked at the financial statements of all publicly-traded newspaper companies in the U.S. and Canada from 2006-2013, a period during which print advertising revenues fell by 62 percent in the former and 36 percent in the latter. (They have continued to fall.) Using the standard profitability measure of EBITDA – earnings before interest, taxes, depreciation, and amortization – I found that despite this shock to their business model, none of the chains suffered an annual loss in any year during this period. Most were still making double-digit profit margins in 2013. Some had profits as high as 20 percent. It turns out those multi-million dollar losses the headlines reported were mostly on paper, as under standard accounting rules companies may deduct from their operating profits the reduced value of their business as an “extraordinary” loss. The newspaper chains that went bankrupt were actually among the most profitable. They only went broke because their owners took on too much debt in making acquisitions before the advertising bubble burst and they were unable to service that debt with reduced revenues. Their newspapers, being profitable, continued publishing throughout and emerged on the other side under new ownership. Unfortunately they often went to cagy hedge funds which had bought up their distressed debt for pennies on the dollar and are now squeezing them for everything they’re worth.

Their shrinking circulations and the mass layoff of journalists are newspapers’ way of coping with reduced advertising revenues. Newspapers counter-intuitively lose money on every copy sold, so printing more and trucking them farther and wider now makes little sense. They more than make up the difference, of course, by selling advertising, for which there remains sufficient demand to keep their core business well above water. Most of their needed cost cutting, unfortunately, has involved throwing journalists overboard. This is undeniably bad, but the “adapt or die” meme that emerged a decade ago after a few second-place dailies folded has seen newspapers stubbornly survive. Most have sought more revenues from readers by boosting their cover prices and erecting paywalls that require payment for digital access.

More recently I have focused on UK newspaper companies with similar but more varied results. Some titles, such as the venerable Times, lost money for years before bringing in the paywall, which has put them in the black. At the Guardian, they simply asked readers to send them money while keeping online content free. Millions of pounds have since poured in, all but assuring its future. Other researchers have found rich datasets that corroborate my findings, such as Keith Herndon in a forthcoming Newspaper Research Journal article and Miriam van der Burg in her recent dissertation on the Belgian newspaper industry. Iris Chyi and Ori Tenenboim of the University of Texas recently found that the 25 largest U.S. dailies more than doubled their subscription prices on average between 2008 and 2016, with the price increases accelerating after 2012.

The French have a saying: Plus ça change, plus c'est la même chose, which translates as “the more things change, the more they stay the same.” Media are undeniably changing. It would be folly to claim otherwise. The question is how radically the media landscape will change, ie. whether the future will be online only or if print and broadcasting will endure. Empirical evidence is mounting to support the latter conclusion, at least as far as print is concerned, however unpalatable that may be to digital usurpers like Nielsen. For him to better foresee the future will require him to broaden his perspective.