Trudeau Needs to Rethink his Position on Funding for Media

As Ottawa takes steps to enlarge Canada’s role in international relations, promising a 70% increase in defense spending over the next decade, Canadians may be inclined to feel a bit more secure in a world that seems more chaotic and threatening by the day.

Foreign Affairs Minister Chrysta Freeland’s assertive address to Parliament earlier this month on diplomacy in the era of Trumpism, and Defence Minister Harjit Sajjan’s policy statement and spending proposals the following day were both generally well-received as expensive but necessary frameworks for the preservation of national security.

A week later the Commons Standing Committee on Canadian Heritage tabled its report on a 15-month study of the threats facing a third pillar of national sovereignty and democracy— the nation’s news media. It noted that in the harsh light of the flawed American presidential election and subsequent chaos, it has become clear that the security of our nation and the healthy functioning of its political institutions will, for the foreseeable future, depend on a robust and trusted news and information sector capable of earning the trust of a majority of the population it serves.

The Heritage Committee report, released June 15, is just the latest in a long list of Parliamentary committee and Royal Commission reports dating back to the 1950’s, each of which has acknowledged the vital role of responsible journalism in maintaining democracy. Each has warned of the dangers of allowing media ownership to fall into too few hands, encouraged a diversity of voices, and stressed the importance of maintaining a vital, independent public broadcaster in the CBC/Radio-Canada.

The new Heritage Committee report joins another published by the Public Policy Forum earlier this year under the title The Shattered Mirror, in drawing special attention to the disruptive impact of digital technologies on the Canadian media environment, including both broadcasters and newspapers.

Both refer to research conducted by the Canadian Media Guild showing that about 16,500 jobs have been lost in the media sector since 2008, including about 7,800 layoffs in print media, and nearly 6,000 in broadcasting.

And both documents make clear, the Canadian newspaper industry is in dire straits after a decade of savage staff cuts. Both point to the imminent prospect of the collapse of Postmedia, which owns 15 of the 21 largest English language dailies in Canada—including eight of the nine metropolitan dailies in the Western provinces—and which is itself controlled by a New York hedge fund. Thriving small town papers, they note, are but a distant memory everywhere.

The problem, of course, is vanishing advertising revenue: newspaper industry totals have declined by half since 2007. Almost all of that spending is now directed to the internet, mainly to Google and Facebook, which handle the bulk of the ad placement online.

Conventional over-the-air television is caught in a similar squeeze. Few if any local television stations make a profit anymore, and their newsrooms are lonely places for the handful of broadcast journalists who have managed to hang on to their jobs.

Given all of this, the Prime Minister’s hasty decision to stomp on the Commons committee’s most important recommendation for restoring fiscal health to the nation’s news industry was more than a little disturbing.

The report called for expanding the existing 5% “Canadian content” levy on cable and satellite TV distributors’ profits to include revenue generated from internet services, including wireless and streaming video service like Netflix. All of these services are provided for most Canadians by one of the Big Five: Bell, Quebecor, Rogers, TELUS and Shaw. Between them they account for more than 80% of total revenues in the Canadian communication industry, including both broadband, and conventional television and radio. The additional money raised this way, around $1 billion a year, would go to supporting public interest journalism in Canadian media.

But before most outsiders had gotten much beyond the table of contents in the 102-page document, Trudeau had declared: “We respect the independence of committees and Parliament and the work and the studies they do, but allow me to be clear: We’re not raising taxes on the middle class — we’re lowering them.”
It was classic populist, small-“l” liberal boiler plate rhetoric, but it reflects a failure to recognize a few important facts.

First, journalism in this country really is in a genuinely perilous state, and as Torstar President John Honderich told the committee, it actually is the case that “the quality of a democracy is a direct function of the quality of information citizens have to make informed decisions.” Something urgently needs to be done, and it will cost money.

Second, the assumption that the big five broadband providers would pass the 5% levy along to their customers is based on an important assumption: that these mammoth corporations constitute a powerful enough oligopoly to set prices independent of normal, competitive market dynamics of supply and demand. In a normal marketplace, some, but certainly not all, of such a levy might be passed along; the amount would be determined by the intensity of competition among providers.

If Trudeau is right in his assumption that a levy would raise prices to consumers rather than eat into industry profits (which are extraordinary, both in absolute terms and as a percentage of revenues), then it is evident that something needs to be done to introduce more competition into the broadband market. Either that, or regulate prices by fiat, as the CRTC and its predecessors have done with telephone fees for many decades.

Third, the electoral chaos caused by misinformation, fake news, and voter suppression through micro-targeting of individuals on social media, will all be fixtures in Western elections for the foreseeable future. To think that Canada will be immune is naïve.

It would be equally naive to rely on Facebook and Google—the main vehicles for this mischief—to solve the problem. The real and obvious antidote to false information and fake news is broad dissemination of carefully verified, factual news and information. In a nutshell, good journalism.

We know how to sustain the processes and institutions necessary to the production and dissemination of high quality journalism, but it costs money. The CBC/Radio-Canada annual budget, for example, runs to nearly $1 billion. The Commons Committee report and The Shattered Mirror both have many concrete suggestions as to how to reinforce and rebuild this process within the context of the digital revolution. But one way or another Canadians are going to have to pay for it, just as we collectively pay for national defense and highways and schools and universities and hospitals, because it must be done.

If not a levy on broadband revenues, then an increase in some other area of taxation will be necessary. Responsible federal leadership demands it.