Media leaders react to Heritage Committee recommendations

Bob Cox, Paul Godfrey and John Honderich on what the government's role should be, whether or not the CBC makes a dent in their online ad revenue and how likely the report's proposals are to be adopted.
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It’s been just over a week since the the House of Commons Standing Committee on Canadian Heritage released its report on the state of the Canadian media. That report, which incorporated more than a year of research, testimony and town halls, laid out a number of recommendations on how the government can help the news media industry keep up with the pace of change.

Among the recommendations were amending the Canadian Periodical Fund to make free and community papers eligible, allowing tax deductions for advertisers buying space on Canadian digital platforms and assisting newspapers with their transition into the digital age.

For many leaders in the media industry, the report was important for what it symbolized: acknowledgement of both the importance of news media and the struggles it currently faces.

“It’s recognition, which is very important for our country at this time,” John Honderich, chair of Torstar, told MiC. 

But in a dense report with 20 recommendations — which also include removing digital advertising from the CBC and a tax on Netflix (a recommendation the Prime Minister has already shrugged off) — reactions in the industry have been mixed. Are the recommendations reasonable? Is bipartisan support there? And can news media accept assistance from the government while still holding it accountable?

MiC caught up with Honderich and other media execs to get their impressions on the report — what they agreed with, what they didn’t agree with and, ultimately, whether they thought it would mean anything in the long run at all.

Riding the digital wave

Many of the recommendations in the report focus on helping newspapers transition to more digitally-focused operations and also to offer assistance to Canadian news companies competing against global players.

Those recommendations include subjecting foreign news aggregators that publish Canadian news (Facebook and Google among them), while selling advertising directed at Canadians, to the same tax obligations as Canadian providers. Also recommended was providing start-up funding from Innovation, Science and Economic Development Canada to find viable online revenue models.

While Quebec publication La Presse has been successful in its transition to becoming a 100% digital publication, posting gains in readership and ad revenue on its La Presse+ product, other major dailies haven’t been so lucky. Though never planned to replace the newspaper, Torstar’s tablet product Star Touch has failed to grab significant engagement, leading to layoffs and a major pullback in investment.

And although many publications have seen gains in digital readership, some say readership isn’t necessarily the problem.

Douglas Knight, the outgoing president of St. Joseph’s Media, told MiC in an earlier interview that quality of digital only takes media companies so far. “If we’re not achieving that digital revenue, it doesn’t mean we need to get better at digital. We’re spectacular at digital,” he said. “It [revenue] is just all going to those two big players.”

Those two big players, of course, being Facebook and Google.

Paul Godfrey, president and CEO of Postmedia, isn’t in denial about Facebook and Google’s presence, but he also doesn’t see a way forward online that doesn’t involve getting more competitive with the digital giants.

“Nobody’s denying that the world is going digital,” he said. “And that’s not to knock Facebook or Google. We work with both of them, and they’re good people to work with. But we also compete with them, and they get 80% of all digital display advertising. And that makes it impossible for us to survive unless we find a path to become more competitive with them.”

But as current models continue to be challenged, Postmedia is tightening its reins on current operations, selling off its media monitoring division Infomart, and announcing that it would discontinue its Monday print issue indefinitely. The issue would continue on as an e-edition to subscribers. Godfrey told MiC that while he would love to see the edition back in circulation one day, the company still had to be realistic.

“I don’t know if I’d close the door overall on the Monday edition,” he said. “We don’t like pulling ourselves out of the market, especially when our competitors are still publishing on Mondays. But I think that’s a decision we have to make based on the circumstances in the future and honestly, my crystal ball is a little hazy right now.”

Honderich said that while the Star has no plans to discontinue any weekday issues, he sympathizes with Postmedia. “Everybody knows that Mondays are the least profitable day of the week to publish,” he said. “But it’s certainly a sign of how tough the business has become.”

Godfrey said of all the actions proposed by the committee, recommendation #5, a temporary five-year tax credit to assist media companies with transitions to digital, was the most useful. “I don’t think that the government should be supporting this industry over the long-term,” he said, comparing it to the government’s assistance of the auto industry following the 2008 recession.

The CBC factor

One recommendation called for the CBC to halt its digital advertising — thus eliminating the government-funded pubcaster from the competition pool against other news media.

Honderich agreed with this notion. He said that although he believed the CBC is “doing an excellent job” with its editorial in the digital space, he believes it should switch to the BBC model, which does not include advertising on its non-commercial, publicly funded platforms.

But Bob Cox, publisher of the Winnipeg Free Press and chair of News Media Canada, said pulling digital advertising from the CBC wouldn’t necessarily end up going to other Canadian news publishers.

“The CBC getting out of digital advertising would free up $25 million,” he said, referring to the amount of revenue that the CBC brought in from digital ads last year. “That $25 million would go straight to Google and Facebook. The reality is, digital growth is almost entirely in the hands of non-news media companies.”

Cox added that this was his personal opinion and not the official stance of News Media Canada.

Godfrey struck a middle ground between the two. He acknowledged that he saw the perceived lack of fairness in a publicly funded platform being allowed to sell advertising. But overall, he said, “I’m not fussed about the whole question.”

“I think what we need to do instead is work on innovating in the digital space so we can stand out on our own.”

MiC has reached out to the CBC for comment, and plans to follow up with a feature interview on the subject in the near future.

An optimistic outlook

The introduction of the report does not guarantee that all (or any) of the recommendations will become legislation — and despite appreciating the symbolism of the report, Honderich said he’s not certain what will actually come of the report.

“I think it’s still very much an open question as to whether or not this is even going anywhere,” he said.

He said that given the Conservative party’s minority report which did not support the recommendations, he doubted that the Ministry of Heritage would take action. MiC has reached out to the office of heritage minister Mélanie Joly, but it had not received a response at press time. However, Joly has told MiC‘s sister publication Playback that her vision would be laid out in a new cultural policy to be announced in September.

Cox and Godfrey, however, were more optimistic than Honderich that the policy would contain tangible actions.

“If the government wasn’t serious about the state of affairs of our industry, they wouldn’t have set up the House of Commons committee, who spent well over a year holding public hearings writing an in-depth report,” said Godfrey. “One would assume that they’re willing to provide some help. Whether it’s sufficient help to get us over the problems we’re having now remains to be seen. But I am very hopeful.”

Cox said while he’s certain the government won’t adopt every recommendation, he thinks some will be brought into legislation. “I’ve been talking to people in the heritage office and in the Prime Minister’s office since early 2016,” he said. “I sensed a feeling that there’s a willingness to do something. It’s not an easy problem to solve, it’s a varied problem, but the government could and will likely do one or two of the things they laid out.”

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