Government Media Bailout Didn’t Work: Department of Canadian Heritage

Copies of Postmedia-owned newspapers at a store in Burnaby, B.C., in a file photo. (The Canadian Press/Darryl Dyck)

Despite the federal government providing a $595 million bailout to the media industry four years ago, news corporations have seen a continuous decline, according to the Department of Canadian Heritage.

The Standing Senate Committee on Transport and Communications heard testimony from associate assistant deputy heritage minister Thomas Ripley on April 25 as part of the discussion on Bill 18, the Online News Act.

“A small number of digital platforms are now dominant,” said Ripley. “Bill C-18 creates a new legislative framework and a regulatory framework to deal with the bargaining imbalances between the digital platforms and the media outlets and enables them to negotiate the true value of online news content in place.”

Ripley said that “the goal is to drive platforms to reach voluntary and fair commercial agreements with news media, or parties do not reach commercial agreements voluntarily.”

He said that under Bill C-18, “platforms will be subject to mandatory negotiation and mediation backstopped by final offer arbitration. Platforms that have a significant bargaining power imbalance with news businesses would be subject to the mandatory bargaining process.”

He also testified that “we have seen a significant decline in journalism,” noting that media corporations in Canada are “in a huge period of disruption and transition.”

Under the Liberals in 2019, the Income Tax Act was amended to pay federal government-approved media publishers a 25 percent payroll rebate of $13,750 per employee along with 15 percent subscription tax credits, according to Blacklock’s Reporter.

The subsidies are in place until March 31, 2024.

Ripley said the program was not effective. “The labour tax credit that’s in place, notwithstanding those interventions, we continue to see a decline in news,” he said.

Heritage Minister Pablo Rodriguez had said earlier that subsidies were essential for an industry that he described as being “in crisis,” noting that “the loss of even just one job is a tragedy.”

No New Jobs

Data from the Department of Canadian Heritage indicate that the bailout did not generate any net job creation in newsrooms. In fact, an Inquiry of Ministry tabled in the House of Commons on Jan. 24 showed that so many journalism jobs have been cut that payroll rebates were running 43 percent under budget.

Former Canadian Radio-television and Telecommunications Commission (CRTC) chair Konrad von Finckenstein told the committee on April 25, “I think we all know what the government is trying to do.“ He said ”it is to keep certain newspapers and newsmakers alive that are suffering very much these days.”

At the time of the media bailout, publishers who had lobbied for government help said it was temporary.

Bob Cox, then-publisher of the Winnipeg Free Press and chair of the lobby group News Media Canada, said at the time, “We will have to save ourselves.”

“The program itself is envisioned to be for five years, and I felt that was an appropriate period of time for the transition because, of course, there will be news outlets, newspapers, that fail the transition, and you can’t give them forever,” Cox testified at 2019 hearings of the Commons finance committee.

“There does need to be a deadline,” he said.

“Deadlines can also focus you and get you moving to where maybe you aren’t moving now,” Cox added. “I think it’s important. I see this as a transitional program and temporary help. I don’t like the idea of a long-term subsidy for newspapers that becomes permanent.”