Peter Menzies: Canada’s News Industry Needs a Better Path Forward

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Commentary

Canada is moving closer and closer to becoming a nation in which both its news and cultural media industries depend upon the government for their survival.

The news industry began its dependence on government in 2019 when the Journalism Labour Tax Credit was created to assist newspapers for a limited period of time—five years—while it transitioned to the digital era. In keeping with Milton Friedman’s dictate that there’s nothing more temporary than a permanent government program, that lifeline has been both extended and enhanced so that it currently covers 35 percent of newsroom employees’ wages up to a maximum salary of $85,000.

Then along came something called the Local Journalism Initiative. It, too, was initially temporary but has also been enhanced and extended. Then there’s the Online News Act that forced Meta to discontinue carriage of news links in Canada and Google to create a $100 million subsidy fund for the news industry (including the already heavily funded public broadcaster, the CBC). Quebec also introduced news media subsidies so extensive that the majority of newsroom salaries are now covered by either the federal or provincial government.

In Ontario, Premier Doug Ford subsidizes media by dedicating 25 percent of government advertising to outlets headquartered in the province. Currently, both the broadcasting and newspaper industry are lobbying for, respectively, an expansion and continuation of the tax credit regime. The broadcasting industry also seeks  to be approved as a Qualified Canadian Journalism Organization (QCJO) and their “fair share” of government advertising.

Some news organizations initially bristled at the idea of accepting government subsidies, but eventually complied when they found it impossible to compete without them. There are but a handful left that don’t depend at least in part on some form of government assistance, and at this stage there appears to be little indication that those won’t continue to expand.

When it comes to film and television production in Canada, licensed domestic broadcasters are required to make basic  investments in certified Canadian content (Cancon). In television, this is historically done by dedicating a minimum amount (few have ever exceeded that) of revenue (25–30 percent in recent years) to Cancon, which is also supported by something called the Canada Media Fund (CMF).

Most of the money for the CMF traditionally came from a Canadian Radio-television Commission (CRTC) dictate mandating that cable companies support it by contributing 5 percent of their revenues to it.

That system, because cable revenues are in a state of what appears to be permanent decline (about 5 percent annually), isn’t working anymore. So, in order to make up the growing gap, the federal government has been throwing increasingly more money into the CMF pot.

As TV executive Brad Danks recently pointed out in the industry publication CARTT.ca, in 2014–15, cable companies produced 63.6 of CMF revenues, with the government making up the rest.

“By 2024–25, that picture had inverted,” Danks wrote. “The CMF’s own Future Program Model Working Group reported BDU contributions had fallen to an estimated 37% of CMF funding — down from 63.6% a decade earlier. Federal contributions had moved in the opposite direction, becoming the majority source.”

The government had hoped it might eventually escape this growing obligation once the Online Streaming Act was implemented. That plan collapsed this spring when cabinet ordered the CRTC to, essentially, put the process on hold. This was done to appease U.S. President Donald Trump, whose administration was successfully lobbied by the American streaming companies—Netflix et al.—that Canada hoped to tap to fill CMF and other coffers.

Further confusing the Canadian media playing field is that the CBC’s funding has increased even as it continues to be permitted to sell TV and online advertising in competition with the private sector. The public broadcaster would never admit that its $1.5 billion subsidy provides enough for it to fulfill its ambitions, but it is sufficiently resourced to this year to announce the creation of new bureaus in Canada and abroad. Private sector newsrooms, meanwhile, continue to contract with both Rogers and Corus, recently announcing significant reductions in staff and infrastructure.

The situation is, to say the least, chaotic. And all of this is taking place under what is, at least from the news and creative media perspective, the ominous shadow of artificial intelligence and the changes it threatens to the manner in which people consume media.

Having shunned the opportunity 10 years ago to take an expansive and coordinated policy approach to 21st-century media and entertainment, Canada now finds itself floating in a sea of uncertainty. Neither the government, the CRTC, nor the industry appears to have any idea what the path forward looks like. In the meantime, the warm embrace of government, encouraged by a drowning and abandoned private sector, grows ever tighter.

Without significantly better leadership, this won’t end well.