Like many people I was shocked to learn that CTVglobemedia Inc. is closing its two A-Channel television stations in Windsor and Wingham, Ontario. The immediate loss of work for the employees and the loss of local news coverage for the communities are immense.

But apparently I’m misinformed. After reading about the closures, I surfed both the Windsor and Wingham A-Channel websites to find a graphic link that read “Local News Matters.” When I clicked it I was taken to a CTV promotional page asking me to join the company in celebrating its 50 years of service to local communities across Canada.

I’m sorry; did I miss something or didn’t you just fire everyone? The link has since disappeared.

It’s an incredibly dire moment for the news business; reports of layoffs continue in all sectors — print, broadcast and online. In fact, the volume of bad news is so large one is hard pressed to keep up with current events.

Tens of thousands of workers have been laid off in the past year at media organizations across North America and the UK. AdAge.com reports that U.S. media industries culled more than 30,000 workers in 2008, or about 3.5 percent of the total workforce. Nearly 200,000 jobs have been shed since the dot-com bubble burst in 2000.

Canadian media have not been spared. CanWest, the owner of 13 daily newspapers and the Global Television Network, eliminated 560 jobs across its print and broadcast holdings last November, close to 5 per cent of its workforce. Click here for an unofficial Cross-Canada media layoff tally.

What’s behind the numbers?

Well, if you take media companies at their word the situation is beyond their control. They’re broke and have no choice but to layoff workers, close stations and stop printing newspapers. The growth of the Internet and other new media, from mobile phones and cable specialty channels, has broken their business models. And the global recession has depleted advertising revenue.

Tribune, the owner of the fabled Chicago Tribune and Los Angeles Times filed for bankruptcy last December. The Philadelphia Inquirer followed suite in February. And Hearst Corp. has stopped printing the Seattle Post-Intelligencer; the publication has been shifted to the web. Hearst also has threatened to close the San Francisco Chronicle if it can’t wring concessions and staff reductions from its 1,500 unionized employees.

Yes, these companies are in financial trouble, but all is not as it appears. Take the newspaper industry, for example. We are told these ink-on-paper dinosaurs are unprofitable and near extinction — soon to be displaced by younger, more nimble rivals on the Internet.

Before we accept this claim there are some stubborn facts we must examine. First, large dailies have enjoyed double-digit profit margins — in some instances above 20 per cent — for decades. Yes, the Internet took a bite out of newspaper revenues, particularly in classifieds that have historically accounted for 20 per cent of revenue. Despite this hit newspapers remained profitable.

What is hurting media corporations is the extremely heavy debt load they assumed to finance aggressive corporate expansion and media consolidation. In the U.S. layoffs at Tribune Inc., the owner of the famed Chicago Tribune, came as the company struggled to finance an enormous debt load accrued as a direct result of its mergers and acquisitions, including the 2000 merger with Times Mirror, the publisher of the Los Angeles Times. The Guardian newspaper reports that Tribune was a profitable company in 2007 — posting profits of US $87m on sales of US $5.1bn. Then new owner Sam Zell saddled the company with roughly US $13bn in debt to take the company private. Unable to cover its short-term debt during a recessionary downswing, Tribune declared bankruptcy in December 2008. Similarly onerous short-term debt loads are hurting the Philadelphia Inquirer and other media companies.

A similar story is playing itself out in Canada. CanWest Global is shouldering a Cdn $3.9b debt accumulated as a direct result of its purchase of newspapers, including the National Post, from Hollinger Inc. This debt only increased when it partnered with Goldman Sachs to purchase a number of highly profitable cable channels such as HGTV, the Food Network and Showcase from Alliance Atlantis.

Hold it; did I say profitable? Yes.

“What is often overlooked is that CanWest’s businesses are highly profitable and generate well over $500-million a year in operating profits.” Who said this? None other than CanWest CEO Leonard Asper, quoted in the Globe and Mail. Click here to read CanWest’s latest financial statements.

CanWest’s problem, like Tribune’s, is not that newspapers and television stations are unprofitable. It’s that it is having trouble meeting its short-term debt obligations. Remember, these obligations are a direct result not of providing quality programming; they were caused by a corporate convergence strategy that sought to bundle cross-media properties under one corporate roof.

Similar problems are faced by CTVglobemedia which (under its previous corporate incarnation as Bell Globemedia) paid close to Cdn $1.4b to purchase CHUM Ltd. (the former owner of the A Channel branded stations) and its stable of television, radio and specialty channels, including Bravo and MuchMusic.

The financial health of CTVglobemedia is harder to determine, because as a privately held company it is not obligated to reveal its financial results. However, as Grant Surridge has reported in the National Post, “according to information available through Torstar’s regulatory filings, CTVgm reported net income of $17-million on revenue of $1.57-billion for the nine months ending Aug. 31, 2008.” Not too shabby.

Civic leaders and media unions, such as the Canadian Media Guild and the Communications, Energy and Paperworkers Union, warned the Canadian Radio, Television and Telecommunications Commission (CRTC) about the negative consequences of increased corporate concentration. They also warned that the debt loads associated with those mergers would erode local programming.

Too bad the CRTC didn’t listen.

James R. Compton is Associate Professor in the Faculty of Information and Media Studies at the University of Western Ontario.