by Thomas Walkom
A Commons committee charged with looking into Canada’s troubled media has suggested an implicit bargain.
On one hand, through a series of tax changes and grants, the government would offer financial support to traditional and new media companies.
On the other, the government would crack down hard on media mergers that far too often leave local communities badly served.
It’s not a bad saw-off. Canada’s financially troubled media firms would be wise to support it.
Thursday’s majority report from the Liberal-dominated Commons heritage committee is not government policy. Indeed, Prime Minister Justin Trudeau has already ruled out one of its recommendations – a 5-per-cent levy on broadband Internet services designed to catch streaming companies such as Netflix, which currently are able to avoid paying their full share of Canadian taxes.
Trudeau calculates, correctly, that a so-called Netflix tax would be a political loser, particularly among the younger voters he has so carefully wooed.
But most of the other measures recommended by the report, such as a five-year tax credit to help traditional print media go digital, are sufficiently obscure that they may not create much voter backlash.
The federal government already offers a host of tax breaks to selected industries. Canadians seem fine with the idea.
The committee heard from a host of witnesses who detailed the troubles faced by Canada’s once-
lucrative media industry.
In essence, they boil down to this: Good journalism costs money; but the rise of the Internet has starved traditional media of the revenues they need.
Newspapers have been particularly hard hit. Readers have come to expect they can get newspaper content online for free. Advertisers, the other traditional source of newspaper revenue, find it more profitable to deal directly with online giants, such as Facebook and Google.
The response of some newspaper chains has been to slash costs and centralize production through mergers. That in turn has led to skimpier products that attract even fewer readers.
The committee report singles out what it calls “the devastating impact of the 2014 Postmedia/Sun Media merger.”
That union of the country’s two biggest chains led to mass layoffs. The net result, the report says, is that “the diversity of voices and opinions has been greatly diminished and the principle of democracy challenged.”
It didn’t mention that the merger also failed to solve Postmedia’s fundamental financial problems.
The report recommends that Canada’s competition laws be altered to demand a so-called “diversity of voices” test whenever media companies want to merge.
Traditionally, Canadian governments have paid considerable attention to the needs of media companies, offering them over the decades an array of goodies, ranging from printing contracts to postal subsidies.
At one point, Ottawa even subsidized The Canadian Press, the national wire service.
In part, this was because politicians found the media useful – either because they were explicitly partisan or because they acted as a conduit to the public.
But as Donald Trump has shown, politicians today can speak directly to the public through mechanisms such as Twitter. Their messages can be literally unmediated.
Will Trudeau want to spend any political capital to help out mainstream media he may no longer need?
Will Finance Minister Bill Morneau be willing to add more tax breaks at a time when he is trying to reduce the number that already exist?
And even if the government does implement most of the committee’s recommendations, will this be enough?
At one level, the economics of media are simple. People who want to know what’s going on in the world pay other people, commonly called journalists, to tell them.
The buyers may pay directly by, for instance, purchasing online subscriptions. They may pay indirectly by buying goods advertised in the medium they are using. Or, as in the case of CBC, they may pay through taxes.
But if newsgathering is to work, the news-gatherer has to be able to earn a living. That’s also what this report says.
Thomas Walkom appears Monday, Wednesday and Friday.
Copyright 2017-Torstar Syndication Services