Saving local news
Saving Local News
The following is an edited version of a Unifor Media presentation to the Canadian Association of Journalists in Edmonton May 27, 2016, by Unifor’s Howard Law, director of the union’s media sector.
I believe we are past the point of discussion of whether there is a crisis in the business model supporting local news in Canada.
I am also past the point of engaging in the argument that deregulation and unmitigated market outcomes are the solution to our problem. A truly unregulated future in local news is a foreign-owned media with large sections of the country either underserved by local news, or not served at all.
So if we are going to be reasonable Canadians about this, what is to be done? How do we close the widening gap in the business model between a diminishing advertising market and the cash that is required to do local news.
What is to be done? Or to put it more directly, “Who should pay?”
Everyone would like the answer to be, “Well, those who consume news.” Except this has become impossible to rely upon, thanks to the Internet.
The modern-day conundrum of viewers and readers being addicted to online free content is generally true about all Canadian content, be it drama, documentary, print, or broadcast.
It is especially true about news.
For the longest time in the regulated TV industry, we made the Canadian media companies pay; specifically, the cable and satellite companies through their five per cent revenue levy directed towards film production funds and, to a lesser extent, community programming.
Nobody ever settled the question of who was really paying — the consumer or the company — but the income stream was there, reliably.
But that revenue stream is in decline. And it’s in decline because of the competition from unregulated Internet broadcasting by foreign and, more recently, Canadian companies.
Currently, the Canadian Radio-Television and Telecommunications Commission (CRTC) has before it a number of proposals to divert a portion of the existing cable company contributions to Canadian content, into a Local News Fund.
In addition to that Fund, Unifor advocates dedicating a slice of the broadcasters’ existing
CanCon spending obligations on local news.
The Canadian Media Guild advocates adding the media companies’ Internet Service Provider (ISP) sales to the revenue stream supporting Canadian content and local news.
The Friends of Canadian Broadcasting has advocated expanding the use of tax credits currently
dedicated to film and TV production and to apply it to producing local news.
We are waiting for a decision on the Local News Fund from the CRTC — we expect it any day now.
We will see what action the CRTC takes, but almost everyone in the industry would agree that even a Local News Fund is the proverbial finger in the dike.
That’s because the revenue model for conventional television is in long-term decline, and producing local news is flat out unprofitable in most local markets. Across Canada, small and medium stations, especially independent local stations, are on the brink of going off the air. If we don’t fix this, even large networks are going to cut bait on providing local news in some markets.
A more general, less-targeted strategy for supporting local broadcast news is to do something about the overall financial health of Canadian broadcasting, and to trust the broadcasters to subsidize local news with those profits. This worked reasonably well for a generation, but it’s coming to an end. The question is whether we could extend it further.
The CRTC got a mandate from the Harper government to unravel the broadcasters’ business model by imposing “pick-and-pay.” All expert projections are that pick-and-pay will be a major hit to broadcaster and cable company revenue, and that is why you saw the latest rash of layoffs at CTV and Rogers.
The Liberal government ought to revisit pick-and-pay and some of the other populist changes the CRTC made in 2015. And, while we have their attention, the Liberals need to compare the Canadian situation to the relatively healthy state of local TV markets in the U.S. where the Federal Communications Commission (FCC) has engaged some very successful regulatory tools, such as:
Local market protection rules;
Fee-for-carriage (i.e. stopping the cable companies from stealing broadcasters’ signals and then selling the signal to cable customers for profit); and,
sharing the revenue raised by the government’s lucrative auctions of public spectrum with broadcasters so they can defray their costs of technological changes.
We need to look at the newspaper side of the equation as well, of course. What Internet streaming is doing to conventional TV, free online news is doing to newspapers at a greatly advanced pace.
Again, who should pay? “Consumer/citizens” ought to pay. And everyone ought to eat right, strive for a work-home balance, and call their mothers more often.
But consumer/citizens would be paying if government acted on their behalf with budgetary decisions and tax policy.
We think of Canadian newspapers as unregulated, if you don’t count one very big regulation: the tax policy on deducting advertising expenses that favours Canadian-owned newspapers and magazines.
What else could we do for newspaper journalism?
We could use tax policy or government spending more aggressively as an indirect “local news tax.”
How?
If you look at the steps taken by governments in other jurisdictions, you will find outright subsidies (France, Austria).
You will find project-specific grants (Netherlands for innovation projects; Belgium for investigatory journalism).
You will find governments spending more advertising dollars in newspapers (Belgium) or government assistance for Newspapers-In-Education programs (again, Belgium)
You will find advocates in Germany pressing for tougher copyright laws to protect original news from republishing.
Without doubt, any state assistance in print or online newspaper publishing will provoke ideological hostility from many quarters as a threat to independent journalism. It will come from very sincere critics who are going to have to match their objections with practical suggestions about how to solve the crisis in local news without government help.
The objections to government aid to newspapers will also likely come the loudest from those media companies who believe they can be the “last man standing.”
If we are going to ask government to find the right regulatory and budgetary tools to support local news, then we should go a little further in answering the question of who should pay beyond taxpayer-funded government aid.
Print journalism is migrating to digital platforms, and the end of that transition is only a matter of time. Newspaper companies — we should probably stop calling them newspaper companies and find some other name — aren’t making money off of the Internet with digital ad rates at 20 cents on the print dollar.
Yet tech companies and Internet Service Providers sure are making good money, and those companies need to share in their financial success that comes from ISP subscribers logging on for free content.
Google and Facebook profit from an unregulated, unchallengeable economy of scale and from being shielded in a foreign jurisdiction. They have hoovered up the Canadian media advertising market on an amazing scale.
We can at least impose a sales tax on these foreign companies for product they sell in Canada; some of that money could go into government consolidated revenues or be diverted directly to producing local news, on all platforms.
Again, we could extend the existing five per cent CanCon contribution requirements to foreign-based Internet broadcasters, i.e. Netflix, Google, Facebook, thus supporting local news, again on all platforms.
But enough about Google, Facebook, and Netflix. Canadian companies have to do their part.
To borrow the Canadian Media Guild’s idea, the CRTC could recalculate the CanCon contribution formula by requiring Canadian media companies such as Bell, Shaw, Rogers, Telus, and Videotron to include their ISP revenue in the equation.
There you have it — an overstuffed tool box of regulatory actions that the government can take either directly, or by giving policy direction to the CRTC.
Public policy design is a craft. Research needs to be done and numbers crunched.
But first, an honest recognition of the problem is needed, namely, that both a regulated solution and the political will to pursue it are necessary. And we better get on with it.