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Ottawa dithers while local newspapers die

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Image: Howard Lake/Flickr

That great showman, P.T. Barnum, once said: "He who is without a newspaper is cut off from his species."

Welcome to the new normal in Canada: Since March 11, when the World Health Organization declared a global pandemic for COVID-19, tens of thousands of us have been cut off from our only sources of local news.

In a startling finding, the Local News Research Project at Ryerson's School of Journalism has identified 52 media outlets that have been shut down permanently or temporarily in the last month and a half, and another 41 that have cancelled some print editions or cut back news broadcasts. As well, 78 newspapers or broadcast stations have suffered job losses, meaning that those outlets have fewer resources to cover news at a time when we need it most.

Gone forever, newspapers like the Tilbury Times, a weekly that has served its southwestern Ontario community since 1884.

"The losses in such a short period of time are unprecedented," says April Lindgren, who is the Velma Rogers research chair at Ryerson's School of Journalism and principal investigator for the Local News Project. Her cutting-edge research has identified 215 community papers that closed over the 12 years from 2008 to the present, and the acceleration of closures in the first six weeks of the pandemic. Lindgren notes that many of the closings and cancelled print editions have been described as temporary, "but given the uncertainty about when -- or if -- lost revenues can be recovered anytime soon, they may be gone forever."

Closures during COVID-19 have hit certain areas of the country particularly hard. Manitoba lost 12 of the 14 media outlets Lindgren's project tracked. Newfoundland and Labrador lost eight of 10, and Nova Scotia 11 of 15. Ontario has lost 14 of the 30 news organizations tracked. Quebec, on the other hand, has so far not lost one; newspapers there have for years received funding from the provincial government.

Gone forever, The Prairie Farmer, the Selkirk Journal and the Stonewall Argus & Teulon Times, three Postmedia papers in Manitoba.

News media have only two sources of revenue -- subscriptions and advertising -- and both are in steep decline. Publishers have turned to the federal government for help, arguing that news is an essential service. But dealing with Ottawa has proven to be frustrating.

Case in point: A controversial $595 million federal assistance program for newspapers that was announced with much fanfare 18 months ago still hasn't paid out a cent. It's snagged in red tape.

The Liberal government announced the five-year journalism support program in November 2018 as part of its fall economic statement. It then provided details in its 2019 budget. Winnipeg Free Press publisher Bob Cox, who is also chair of the Canadian News Media Association, an industry lobby group, said in an email interview: "The program was groundbreaking in that no Canadian government has ever provided that kind of direct support to the newsrooms of private news media before.

"The program was also exceptional because of the amount of subsidy -- 25 per cent of newsroom salaries, which is at a level where it really makes a difference, rather than simply being token support."

But the program false-started when it became clear that the government legislation was not tailored to the realities of today's newspapers. For instance, most of the aid was in the form of refundable tax credits. That made it a tax program, which put it in the hands of the Canada Revenue Agency. It also built in delays. Newspapers weren't able to apply for the money until the tax year was over. So funding they might qualify for in January 2019 wouldn't be paid until at least 2020. 

Many newspapers couldn't wait that long and fell by the wayside -- gone forever -- like The Casket (dying to read it?), a free weekly published since 1852 in Antigonish, N.S. 

Also, says Cox: "About 75 per cent of news media companies, including Postmedia and Torstar, were disqualified because a company could not get the labour tax credits AND support from another government program. Most of us have small community papers that get money from Aid to Publishers (a program to help those papers with distribution costs)."

Therefore, the large chain owners were ineligible -- obviously a problem because Postmedia owns nearly half of Canada's 105 daily newspapers.

The legislation was written by tax lawyers with little appreciation for how newspaper ownership worked. Some of these flaws, but not all, were fixed by the government in March, but then the COVID-19 pandemic hit. Everything ground to a halt. 

The government, according to Cox, "appointed a panel to approve journalism organizations for the program. But COVID has slowed this down as well." He said most newspaper companies have applied for status as qualified Canadian journalism organizations and filed information to apply for the tax credit. "None of us has yet been informed whether we have (this) status," Cox said. He estimates that it could be September or later before any payments are made to newspapers.

Too long to wait for the Labrador Voice, the Annapolis Valley Register, the Compass and the South Shore Breaker, four papers in the Maritimes whose circulation was suspended by Saltwire Network. 

While he says newspapers are happy for federal help, Cox says "I have argued for a while that the Liberal government has the will to help news media, but lacks a comprehensive approach. There is too much ad hoc work. There are now five programs without a lot of co-ordination that still leave a lot of holes -- like smaller outlets and startups.

There are also problems with the 25 per cent wage subsidy. It only covers up to a maximum of $13,750 per journalist, which is far below scale at most large news organizations.

Instead of fixing what's wrong with its tax-credit legislation, the federal government added another program to compensate news organizations for losses due to COVID-19. Federal Heritage Minister Steven Guilbeault says he expects money from an emergency COVID-19 general business wage subsidy program to start flowing within weeks to Canada's beleaguered newspaper industry.

Promises, promises. As Cox says, "we still have seen no federal aid two full months after COVID killed our revenues."

Most companies have calculated what they could be eligible for based on their number of newsroom employees and salaries. That is why the books of companies like Postmedia have multi-million-dollar receivables recorded. But Cox says: "You can't go to the bank and borrow money based on a government program that has not yet operated or told you that you qualify for it."

At his newspaper, the Winnipeg Free Press, Cox has calculated that it is owed about $1 million for 2019. "That would make a huge difference right now. COVID has knocked the stuffing out of our revenues. Ad revenues are down about 50 per cent at newspapers. We've cut salaries. We've laid off some staff ... I'm working at 50 per cent salary. We could have avoided some of this with that tax credit money."

Cox joined publishers from nine other newspaper organizations this week in signing what they called "an urgent message to the Government of Canada." It states that "in April 2020 alone, Australia and France both announced plans to make sure Google and Facebook pay their fair share, instead of exploiting tax loopholes while making billions of dollars off the back of original content producers."

"We, the undersigned publishers representing the vast majority of Canadian newspapers, call on Ottawa to follow the example of France and Australia," according to the letter.

Phillip Crawley, publisher and CEO of The Globe and Mail, said it's "very unusual for all the Canadian publishers to be on the same page, literally."

"With the publication of all those names, it was pretty much every major Canadian newspaper company that was represented there," said Mr. Crawley. "I don't remember an occasion when everybody's put their name to a statement."

In late April, the Australian government announced that Facebook and Google would be compelled to pay news media outlets for content in a bid to more equitably distribute advertising revenue -- the loss of which has hit media outlets around the world particularly hard. The Canadian newspaper industry has pushed Ottawa for years without success to level the playing field. Facebook and Google gobble up the majority of online advertising in Canada and do not pay newspapers for the content they carry.

So while Ottawa dithers, newspapers are dying.

Rest in peace, Kingsville ReporterLakeshore News (Windsor-Essex), Napanee Guide and Tecumseh Shoreline Week. No one will ever read you again.

From media executive to media critic, John Miller has seen journalism from all sides (and he often doesn't like what he sees). He draws on his 40 years in news, including five years as deputy managing editor of the Toronto Star, and 10 years as chairman of the School of Journalism at Ryerson University. His 1998 book Yesterday's News documented how newspapers were forfeiting their role as our primary information source. This column originally appeared on John's blog.

Image: Howard Lake/Flickr​

 

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