For the sake of our democracy, American hedge funds should be banned from owning Canadian newspapers

Newspapers play a vital role in a functioning democracy. They provide the key ingredient: a well-informed citizenry.

Because of their centrality to the democratic process, Canadian tax and investment laws have aimed to keep newspapers Canadian-owned.

Unfortunately, however, those laws are full of loopholes. And so, in 2010, Stephen Harper’s Conservative government had no trouble permitting the takeover of Canada’s largest newspaper chain — with more than 100 media outlets, including leading dailies like the Vancouver Sun and Ottawa Citizen — by a company called Postmedia, even though Postmedia was owned by several U.S. hedge funds.

In addition to the foreign ownership concern, hedge funds make notoriously bad owners because they focus on slashing costs to increase shareholder value. Indeed, Postmedia newspapers have been forced to dramatically cut costs, as their revenues have been siphoned off in debt payments to the hedge funds.

The union representing many Postmedia journalists — the Communications, Energy and Paperworkers Union — tried but failed, to stop the takeover. Harper’s willingness to allow this dreadful takeover was no doubt linked to Postmedia’s right-wing bent and support for conservatives like himself.

This right-wing bent became even more pronounced in 2016, when Postmedia’s major shareholder became Chatham Asset Management, a New Jersey-based hedge fund owned by wealthy Republican donor Anthony Melchiorre.

Interestingly, Chatham played something of a role in helping Trump get elected the first time, and Melchiorre dined with Trump at the White House shortly after his election.

Chatham became connected to Trump through David Pecker — the tabloid mogul who had a pact with Trump to use hush-money payments to kill stories about Trump’s philanderings to help Trump’s election bid.

Pecker was an important player at Chatham, which owned Pecker’s media empire, including the National Enquirer. And, despite his questionable journalistic ethics, Pecker was appointed to the Postmedia board, where he served from 2016 to 2018.

Clearly, none of this bothers Conservative Leader Pierre Poilievre, whose media focus has been on defunding the CBC — a reckless move that would deprive Canadians of a reliable Canadian news source just when it’s most needed.

Poilievre portrays the CBC as wasteful and costly.

However, a recent report by the Canadian Centre for Policy Alternatives (CCPA) notes that, among 18 countries with public broadcasters, the average annual public funding was $78.76 per capita, whereas Canada’s public broadcaster funding was less than half that — $32.43 per capita.

The CCPA report also cited surveys showing that, across a broad range of countries, public broadcasters rank high as trusted news sources. A recent Pollara survey of 3,500 Canadians found CBC to be the most trusted news source among anglophones, with 67 per cent finding it “trustworthy,” while Radio Canada ranked most trusted at 78 per cent among francophones.

Defunding the CBC would leave millions of Canadians more dependent than ever on right-wing Postmedia newspapers, which suits Poilievre just fine.

But Prime Minister Mark Carney should protect Canadian democracy by enforcing Canadian laws to ensure our newspapers are Canadian-owned.

Carney could even encourage employees to buy control of their newspapers — as employees of Victoria-based radio station CHEK did in 2009, when the station faced bankruptcy. With each contributing $15,000, the employees formed a co-op. The station has since thrived, with its staff more than doubling from 30 to 80 employee-owners.

Whatever slim justification there might have been back in 2010 for Harper to approve the foreign takeover of some of our best newspapers is surely gone.

We now urgently need those newspapers to be owned by loyal Canadians committed to Canada’s independence — not by a hedge fund aligned with a manipulative and deceitful power-monger who has designs on us.

This article was originally published in the Toronto Star.