A report on
Canada’s
troubled news media released by the Public Policy Forum recently – titled
The Shattered Mirror – extends the reflective analogy used by Senator Keith Davey’s
study of mass media in 1970. “In the decades since Senator Davey declared the
media mirror ‘uncertain,’ it has cracked and now appears shattered,” states the
think tank headed by former journalist
Edward Greenspon, which was
hired contracted by Industry Canada and the
Heritage
committee studying Media and Local Communities ministry. Yet the PPF report is more
like a funhouse mirror that grossly distorts reality in at least one key media industry.
Not only does it buy into the Big Lie that has surrounded newspapers for years
– that they are losing money and thus dying – the report seemingly does its
best to promote that myth. It repeats the canard that industry dominant
Postmedia Network is bleeding red ink by mentioning that the company lost $352 million
in its fiscal year ended last August 31. That’s only if you deduct a $267
million “impairment” charge that reflects the reduced value of Postmedia’s
business on paper, plus a raft of other extraordinary expenses such as the $42
million cost of severing staff. Otherwise, on a cash-in/cash-out basis, Postmedia
recorded operating earnings of $82 million on revenues of $877 million for a profit
margin of 9.3 percent, which sure beats buying bonds. What really dragged it
down, however, was the $72 million in interest payments the company had to make
on debt bizarrely held mostly by its
U.S.
hedge fund owners. That piece of financial engineering more than anything is necessitating
Postmedia’s constant staff cuts and thus diminishing Canadian journalism.
The PPF report is silent on the problem of
U.S.
hedge funds owning
Canada’s
largest newspaper company, which was inexplicably allowed by the erstwhile
Harper government despite a supposed 25-percent limit on foreign ownership.
Postmedia then bought 175 of the 178 newspapers owned by Sun Media, Canada’s
second-largest newspaper company. That gave it both dailies in
Vancouver,
Calgary,
Edmonton
and
Ottawa, but the Competition
Bureau let the purchase stand because it somehow concluded those newspapers
didn’t compete anyway. Postmedia then merged the newsrooms of its duopoly
dailies in all four cities despite promising not to, effectively eliminating
daily newspaper competition there. The PPF report gives the Competition Bureau
a pass, noting only that it was “caught by surprise” by Postmedia’s broken
promises. The company’s dominance might not be apparent in
Toronto,
where its Sun and National Post have competition from the Star and Globe &
Mail. In the three westernmost provinces, however, it has a stranglehold with 75
percent of paid daily circulation and eight of the nine largest dailies. We
wouldn’t be in this situation if
Ottawa
enforced our foreign ownership and competition laws.
The report further perpetuates the newspaper death myth by pointing
out that six Canadian dailies were closed, merged or changed publication
frequency in 2016. Can you name them? I had to look it up. Most would guess the
Guelph Mercury, which was shuttered a year ago to some consternation. The other
five were small town dailies in B.C. and
Alberta,
only one of which was actually closed. Four of them were owned by the B.C.
chains Black Press and Glacier Media, which have been carving up the province’s
community press between themselves unhindered for years. The chains have been
playing a real-life game of Monopoly since 2010, buying, selling and even trading
newspapers back and forth and then often closing them to reduce competition.
Black and Glacier have
closed 19 of the newspapers they have exchanged,
including non-dailies. More than half of the 15 newspapers the chains traded in
one 2014 deal were subsequently shuttered. Of the seven paid circulation
dailies that have died in
Canada
this decade through closure or merger (not lived on with a change in publication
frequency), six were killed by Black or Glacier. As a result, Black Press (no
connection to Conrad Black) now owns all but one of the newspapers on
Vancouver
Island, which is the size and population of
New
Brunswick. Has the Competition Bureau even noticed?
But my favorite part of the report is where the PPF predicts
that newspaper sales will fall to only two per 100 households by 2025, down from
18 in 2015 and 49 in 1995. How it came up with that projection, other than by
using a lead weight, is beyond me. So ardently does the PPF promote the
newspaper death myth that the heading for this section screams “THE END MAY BE
IN SIGHT.” That may accord with the popular misconception, and with what the
late American media critic Ben Bagdikian called the “myth of newspaper
poverty,” which publishers on both sides of the border have promoted for
decades to their great regulatory benefit. It doesn’t accord with financial facts,
however, which I detail in my 2014 book
Greatly Exaggerated: The Myth of theDeath of Newspapers. Their revenues have undeniably fallen off a cliff in
recent years, but my research shows that no publicly-traded newspaper company in
the
U.S. or
Canada
suffered an annual loss on an operating basis between 2006 and 2013. That period
included their steepest revenue declines ever during the Great Recession of
2008-09. Newspapers will survive as long as they remain profitable, which they
show an uncanny ability to do. That’s because they are remarkably adaptable organizations
and are able to make themselves smaller in short order, unfortunately by mostly
throwing people overboard. This has weakened their journalism and endangered our
democracy. We need digital media to pick up the slack, but they find it hard to
compete for advertising revenue with Google and Facebook.
The PPF report makes some interesting suggestions for measures
to breathe life into Canada’s
flagging news media. Changes to the country’s antiquated laws on charitable
giving are badly needed to allow non-profit news media outlets to accept
tax-deductible donations, as they can in the U.S.
and other countries. The report’s suggestion of taxing Canadian companies that
advertise with the American digital giants, then using the proceeds to subsidize
Canadian news media, may be realistic depending on how it is done. Let’s hope
that Greenspon and his researchers are better informed in those areas than they
are on newspaper economics.
