tag:blogger.com,1999:blog-46889949511991891622024-03-05T22:49:43.522-08:00THE NEWS WE DESERVEThe Transformation of Canada’s Media LandscapeMarc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-4688994951199189162.post-70155564505422345252020-06-09T13:07:00.003-07:002020-11-18T21:53:06.197-08:00What Torontonians are finally finding out about the news<br />
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Western Canadians cynically refer to Toronto as The Centre
of the Universe. They deride TSN as the Toronto Sports Network. Torontonians
seem puzzled by this, mystified as to why all Canadians wouldn’t want to
know about the latest doings of their beloved Maple Leafs. But now they are
finally starting to find out what Canadians both in the West and in the Maritimes have been complaining about for decades.</div>
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It was only a few years ago that Toronto had four daily
newspapers with four different owners. That’s more than any other city in
Canada or the U.S., at least if you don’t count the <i>Wall Street Journal </i>as
a New York City newspaper. (I would say North America except that Mexico City has
literally dozens of dailies.) This relative abundance of perspectives may have insulated
Torontonians from complaints in other parts of the country about the
ever-diminishing diversity of news media ownership. <o:p></o:p></div>
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Oil baron K.C. Irving bought almost all of New Brunswick’s
media in the 1940s, and his descendants have <a href="https://www.nationalobserver.com/2016/07/06/news/irvings-media-monopoly-and-its-consequences" target="_blank">controlled it</a><b> </b>ever since. The Victoria Times and the Daily Colonist at the other end of
the country merged production facilities in 1950 and gradually morphed into one
title. The Vancouver Sun and Province worked the same type of non-editorial
merger in 1957, but pledged to keep separate newsrooms forever after a federal
inquiry found <a href="http://www.marcedge.com/pacpress.html" target="_blank">Pacific Press</a> to be an illegal monopoly. Competing newspapers gradually began dying across
the country, usually leaving only one daily in every city except Toronto.<br />
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The Montreal Star closed in 1979, leaving the Gazette as
that city’s only English-language daily. When the Ottawa Journal and the
Winnipeg Tribune were folded on the same day in 1980 by the Thomson and Southam
chains, however, the first prime minister Trudeau called a Royal Commission on Newspapers.
It urged limits on chain ownership, but a proposed Canada Newspaper Act was
never enacted before the Trudeau I era expired. <o:p></o:p></div>
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Toronto remained fairly immune to all of the newspaper
consolidation across Canada. Even when the Telegram <a href="https://www.cbc.ca/archives/this-is-it-the-day-the-toronto-telegram-folded-in-1971-1.4884371" target="_blank">folded in 1970</a>, its workers quickly put out the colourful Sun tabloid. It was so successful
that it was cloned in cities like Edmonton, Ottawa, and Winnipeg which had been
left with only one daily, and these clones eventually became the Sun Media chain.<o:p></o:p></div>
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Toronto even added another daily in 1998 when Conrad Black
founded the National Post. Black, a long-time Torontonian, had recently taken
over Southam, which despite being the country’s largest chain and having its
headquarters in the GTA, did not publish in Canada’s largest market. He founded
the National Post as a national daily in competition with the Globe and Mail,
which had published nationally since the early 1980s.<o:p></o:p></div>
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This diversity of ownership began to unravel in 2014. Postmedia
Network, a consortium of U.S. hedge funds that had taken over the former Southam
dailies in 2010 despite a supposed 25-percent limit on foreign ownership in this important
cultural industry, bought 175 of Sun Media’s newspapers for $315 million. Toronto
still had four dailies, but now two of them were owned by so-called “vulture
capitalists,” whose <i>raison d’etre</i> was not journalism but instead profit. Soon after its takeover was rubber stamped by the Competition Bureau, Postmedia <a href="https://www.j-source.ca/article/postmedia%E2%80%99s-promises-prove-practically-worthless" target="_blank">merged the newsrooms</a> of its duopoly dailies in Vancouver, Edmonton, Calgary and Ottawa, effectively turning them back into one-newspaper towns again.<o:p></o:p></div>
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Then just the other week private equity players shockingly took
over Canada’s second-largest newspaper chain, Torstar, which publishes Canada’s
largest daily, the Toronto Star. The hastily-assembled Nordstar Capital
promised to invest in the newspaper’s digital future and to uphold its liberal
ideals, but nothing that soulless private equity players say should be
believed.<o:p></o:p></div>
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Residents of The Centre of the Universe are understandably
nervous. Speculation has Postmedia and Torstar consolidating, perhaps under the
control of private equity player Canso Investments, to which both are deeply in
debt. That would be four Toronto dailies with two owners. Well, at least you’ll
always have the Globe and Mail, except that it recently
went <a href="https://thepostmillennial.com/the-globe-and-mail-asks-trudeau-government-for-more-bailout-money" target="_blank">cap in hand</a> to Ottawa, <span style="mso-bookmark: _Hlk42631676;">pleading poverty and asking for a handout.</span> What next? </div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-58214809204313913822020-06-06T01:23:00.001-07:002021-05-31T23:35:54.117-07:00What private equity firms do to newspaper chains like Torstar<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwCZIkse0y5EPq9Ios7mW_VR1A0L-2CzE9-GkcLkYwDLcRnhzKB3Snk1Ve6XGZroQ_kDLh3zY46BKxbBM8c0E80kqf4BKDOh9E8NDhlOeJ3Ph3U0l0YVb6ELX00eVPZP07sEUdFN_-PIzr/s1600/toronto-star-torstar.webp" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="439" data-original-width="780" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwCZIkse0y5EPq9Ios7mW_VR1A0L-2CzE9-GkcLkYwDLcRnhzKB3Snk1Ve6XGZroQ_kDLh3zY46BKxbBM8c0E80kqf4BKDOh9E8NDhlOeJ3Ph3U0l0YVb6ELX00eVPZP07sEUdFN_-PIzr/s400/toronto-star-torstar.webp" width="400" /></a></div>
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What must be the world’s worst-run newspaper company made
its final, fatal blunder last week when the Torstar board of directors
inexplicably agreed to sell it to a private equity firm for less than its cash
in hand, much less its asset value. Torstar owns not only the country’s largest daily in the <i>Toronto Star</i>, a long-time liberal bastion, but several other Ontario dailies and the huge Metroland chain of community newspapers. The only possible reason I can imagine for the sell-off is
that the Torstar board figured the current downturn in their business
brought by the pandemic will somehow be permanent. Instead, like the rest of
the economy, it is bound to bounce back after a quarter that will admittedly resemble
a black hole on their account books.<br />
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The federal government has been pumping money into a wide
range of businesses recently to keep them afloat during the crisis, not least
the newspaper industry. Torstar recently reported that it expects to receive $18
million from the $76-billion Canada Emergency Wage Subsidy. Ottawa earlier allocated
$50 million in 2018 and $595 million in 2019 to assist the withering newspaper
business. It’s somehow never enough for News Media Canada, the industry
association whose largest member is Postmedia Network, which is somehow 92-percent owned by U.S. hedge funds despite a supposed 25-percent limit on foreign ownership of our press.<br />
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Private equity firms love government handouts,
which may be what got Torstar’s new owners interested. The newly-formed NordStar Capital promises to inject new
life into the country’s second-largest newspaper chain. The important thing to remember about private equity firms, however, is to not believe a
word they say and instead pay attention to what they do. They are the end stage
of newspaper ownership, which began with family ownership in the 19<sup>th</sup>
Century and moved to corporate ownership in the 20<sup>th</sup> Century once capitalists
realized how profitable (and influential) they are. Now it’s vulture
capitalists who are feasting on their still-profitable remains.</div>
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<a href="http://www.j-source.ca/article/postmedia%E2%80%99s-promises-prove-practically-worthless" target="_blank">Postmedia promised</a><b> </b>in 2014 to preserve competition and even boost newsgathering when it bought Sun
Media, then Canada’s second-largest chain. Soon after its takeover was
inexplicably allowed by the federal competition Bureau, Postmedia merged the
newsrooms of its duopoly dailies in Vancouver, Calgary, Edmonton, and Ottawa.
So much for preserving competition. Then there was that naughty business in 2017
when Postmedia and Torstar traded 41 newspapers and immediately closed almost
all of them, creating dozens of lucrative local monopolies for each other. Both swore up and down they had no idea that the other would do such a thing.<br />
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“We
did not have any idea what they were going to do and they didn’t have any idea,”
<a href="https://www.youtube.com/watch?v=UwIWpGWKzUQ" target="_blank">said Paul Godfrey</a>, who was then CEO of Postmedia. “We understand the . . . legal
rules involving collusion and you can ask anybody from Torstar, you can ask
anybody from Postmedia.”</blockquote>
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At least the
Competition Bureau seems to have had its fill of Postmedia’s perfidy, raiding
its offices and those of Torstar to find a paper trail which <a href="https://www.theglobeandmail.com/report-on-business/rob-commentary/torstar-postmedia-and-the-arrogance-of-the-deal/article38336159/" target="_blank">reportedly included</a> agreements not to compete for years in the markets they vacated and even on
which employees would be axed. The chains and their executives now face fines
of $25 million and prison sentences of 14 years on possible criminal charges of
conspiracy and monopoly. The whole thing has been mired in court <a href="https://thetyee.ca/Analysis/2019/10/31/Postmedia-Torstar-Taxpayer-Cash/" target="_blank">ever since</a>. </div>
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It was only one of a series of blunders in recent years by Torstar,
which is quickly slipping under the waves as a result. It spent <a href="https://www.theglobeandmail.com/report-on-business/toronto-star-abandons-star-touch-tablet-app/article35473859/" target="_blank">a reported $40 million</a> in developing a tablet app that failed to attract subscribers and was finally ditched
in 2017. Strike two. It then embarked on a national expansion by hiring 20 new
staff for its Metro chain of free commuter tabloids. It rebranded the dailies
StarMetro and boosted their bureaus in Vancouver, Edmonton, Calgary, and
Halifax. The strategy lasted less than two years and was <a href="https://business.financialpost.com/telecom/media/torstar-shuts-commuter-papers-less-than-two-years-after-major-expansion" target="_blank">scrubbed last fall</a>. Strike three.<o:p></o:p></div>
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Torstar’s profits fell to $29.2 million <a href="https://www.torstar.com/images/pdf/annualreport/2019_TORSTAR_AR_March12_Full_Book_-_with_EY_signature.pdf" target="_blank">in 2019</a>, down from
$34.8 million the previous year in earnings before interest, taxes, depreciation and amortization
(EBITDA). Its 2020 <a href="https://www.torstar.com/images/2020_Q1_FS_and_Notes.pdf" target="_blank">first quarter report</a> curiously did not include
the EBITDA metric, leaving me to calculate it at a shockingly low $2.7 million,
down from $6.7 million in the same period a year earlier. Well, the first
quarter is always the slowest. Except for hehe this year. Did the sudden sight
of freefall panic John Honderich and other members of the families that control
debt-free Torstar into selling their heritage? The
price tag seems a bargain at $51 million. That’s less than the company’s last
two years of earnings. It’s less than Torstar’s $69.5 million in cash. One
wonders what the minority shareholders might have to say.<span style="mso-spacerun: yes;"> </span><br />
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Even curiouser was a revelation by the <i>Globe and Mail</i>
that NordStar was borrowing $50 million to finance the acquisition. Now it
starts to make a bit more sense. The lender is hedge fund Canso Investments, which also financed Postmedia’s
$315-million purchase of Sun Media and stands to inherit both chains if they go
bust. At least it’s Canadian. Postmedia still makes north of $50 million in operating profit a year, however, so Canso could be waiting for a while. It made $54.6
million in its 2016-17 fiscal year, $65.4 million the following year, and $49.3
million <a href="http://www.postmedia.com/wp-content/uploads/2019/11/2019-Postmedia-Annual-Report-FINAL.pdf" target="_blank">in 2018-19</a>, of which $28.5 million went to service its massive debt. It
is also held mostly by its hedge fund owners, which bought it at deep discounts on the
bond market when Canwest Global Communications was facing bankruptcy a decade
ago.<br />
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This is how the hedge funds make their money, by skimming it
off the top every month. As its revenues steadily decline, Postmedia has to cut
costs – mostly by axing journalists – just to keep paying its loans. It did that well
enough to make $26.8 million in <a href="http://www.postmedia.com/wp-content/uploads/2020/05/Postmedia-Network-Canada-Corp-FS-Q2-F20-FINAL.pdf" target="_blank">the six months ended Feb. 29</a>, which was
actually up slightly from the same period a year earlier. That’s a 9.2 percent
profit margin, yet they somehow have everyone bamboozled into thinking they are
losing money and need to be bailed out. They will be getting a big surprise if
<a href="https://petitions.ourcommons.ca/en/Petition/Details?Petition=e-2464" target="_blank">a petition I helped author</a>, which would limit bailout money to Canadian-owned firms,
passes Parliament soon. I figure that would <a href="http://j-source.ca/article/how-to-fix-canadas-biggest-media-problem-in-one-easy-step/" target="_blank">solve the problem</a> of foreign ownership fast enough, as the bandits would likely beat a hasty retreat to the border.<o:p></o:p></div>
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The $50 million that NordStar is borrowing is supposed to go to finance some sort of digital makeover (remember, don’t listen to what they say) but
it is curious that the amount is almost exactly the purchase price of Torstar.
This is what the hedge fund New Media Investments did last year when it paid US$1.4
billion (C$1.9 billion) for Gannett, the largest U.S. newspaper chain. It
borrowed the entire amount and more from another hedge fund <a href="https://www.poynter.org/business-work/2019/the-long-and-winding-road-to-the-gatehouse-gannett-merger-as-told-to-the-sec/" target="_blank">at 11.5 percent interest</a>. Now Gannett is
laden with high-interest debt, just like Postmedia, and will continually have to cut costs as
its revenues inevitably fall. If it goes under, the hedge funds will be first
in line with their debt to take it over without some pesky legal obligations,
such as leases, pensions, taxes, and union contracts, which bankruptcy allows them to escape. The Journal Register chain in the U.S. <a href="https://archives.cjr.org/the_audit/journal_register_future-of-new.php" target="_blank">did this twice</a>. <o:p></o:p></div>
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Hedge funds now own seven of the ten largest U.S. chains. “The
large investment groups tend to employ a standard formula in managing their
newspapers – aggressive cost cutting paired with revenue increases and
financial restructuring, including bankruptcy,” noted <a href="http://newspaperownership.com/executive-summary/" target="_blank">Penelope Muse Abernathy</a> of the University of North Carolina. A 2018 takedown of the trend in the magazine <a href="https://prospect.org/health/saving-free-press-private-equity/" target="_blank">American Prospect </a>laid bare the “malign
genius” of the private equity business model.<o:p></o:p></div>
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It allows the absentee owner to drive a paper into the
ground, but extract exorbitant profits along the way from management fees,
dividends, and tax breaks. By the time the paper is a hollow shell, the private
equity company can exit and move on, having more than made back its investment.
</blockquote>
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The hedge funds even have their hooks into <a href="http://marcedge.com/jombs.pdf" target="_blank">UK newspaper chains</a> now. Johnston Press, one of the largest provincial chains, was taken over by its
lenders in 2018 when it could no longer service its massive debt despite making
a 20-percent profit margin. Newsquest, another provincial chain which is even
more profitable, is owned by Gannett. The most brilliant tactic of all enabling this trend has been bamboozling people into believing that newspapers are instead
losing money and deserve public handouts. Must be the influence.</div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-64692056956160605262018-06-02T02:06:00.004-07:002020-06-14T04:16:05.583-07:00Death by natural causes or premeditated murder? B.C. chains eliminate competition by buying, trading, and closing newspapers<span style="font-family: inherit;">The following was published online in <span style="font-size: 12pt; margin: 0px;"><i><a href="http://futureoflocalnews.org/portfolio-item/death-by-natural-causes-or-premeditated-murder-b-c-chains-eliminate-competition-by-buying-trading-and-closing-newspapers/#1524499620629-c3c4e57a-517a07b0-8bfd" target="_blank">The Future of Local News: Research and Reflections</a></i>, </span><span style="font-size: 12pt; margin: 0px;">Ryerson</span><span style="font-size: 12pt; margin: 0px;"> </span><span style="font-size: 12pt; margin: 0px;">University</span><span style="font-size: 12pt; margin: 0px;">.</span></span><br />
<span style="font-family: "times new roman"; font-size: 12pt; margin: 0px;"><br /></span>
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<span style="font-family: "times new roman"; font-size: 12pt; margin: 0px;"></span><i></i><u></u><sub></sub><sup></sup><b>ABSTRACT</b><b></b></div>
<blockquote class="tr_bq">
The number of paid circulation daily newspapers in Canada fell between 2010 and 2016 mostly due to a series of closures and mergers by two British Columbia chains. Black Press and Glacier Media engaged in a number of transactions, including trades, which were usually followed by newspaper closures or mergers. Including non-daily community newspapers, Black Press and Glacier Media have closed or merged twenty-four of the thirty-three titles they exchanged from 2010-2014, or a competitor one of them already owned. While this would appear to be classic anti-competitive behaviour, these dealings have gone without challenge from the federal Competition Bureau. The earnings of both Black Press and Glacier Media increased in 2016 after several years of decline, which suggests the companies’ strategic trade-and-close strategy improved their bottom lines. This case study points up the laxity of Canada’s antitrust laws in dealing with newspaper mergers and takeovers.</blockquote>
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Keywords: Newspapers, Black Press, Glacier Media, Competition Bureau, local news, media competition </div>
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Canada’s newspaper industry was convulsed yet again in late 2017 when the country’s two largest chains traded 41 titles in Ontario and closed almost all of them, creating dozens of local monopolies. The dealings by Postmedia Network and Torstar Corp. prompted the federal Competition Bureau to launch an investigation (Krashinsky Robertson, 2017). It had been criticized for allowing industry dominant Postmedia, which was owned mostly by U.S. hedge funds, to take over in 2014 Sun Media, then the country’s second-largest newspaper chain. Swaps and closures similar to the Postmedia-Torstar deal had gone without challenge in British Columbia since 2010, however, which may set a precedent preventing the Competition Bureau from rolling back the Ontario trade and closures. This chapter presents evidence suggesting that the closure of local dailies in B.C. after transactions between Glacier Media and Black Press amounted to collusion aimed at boosting the financial fortunes of those organizations. It analyses primary sources in the form of industry data and financial reports in an effort to explain the elimination of newspaper competition in B.C. since 2010. As such it hopes to provide some needed context for the Ontario dealings under federal review.</div>
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<b>Literature Review</b></div>
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A seemingly inexorable trend toward local monopoly has defined the newspaper industry for the past half century due to its inherently large economies of scale and high barriers to entry (Bagdikian, 1983). Once a monopoly is achieved, advertising rates and circulation prices can be raised at will, resulting in increased profits (Lacy & Simon, 1993). As one economist who studied Canadian newspapers noted: “These price effects are so powerful that they provide ample motivation for the long and steady trend to newspaper mergers and takeovers” (Kerton, 1973, p. 605). Vigilant antitrust oversight is thus required to preserve competition in this industry, which is vital to political discourse. That has historically been lacking in Canada (Edge, 2016).</div>
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Recent newspaper industry consolidation in North America has been justified in large part by a persistent “death” narrative. Advertising revenues flowing to newspapers began to decline in the mid-2000s, and the trend accelerated with the 2008-09 recession. Print advertising revenues dropped by 63 percent at U.S. newspapers between 2006 and 2013, and by 36 percent at Canadian newspapers (Edge, 2014). Despite a steep decline in their earnings as a result, however, financial data showed that newspaper companies continued to enjoy healthy operating profit margins by making deep cost cuts (Edge, 2014; Edge, 2017; Herndon, 2015; Van der Burg & Van den Bulck, 2017). One 2012 study found that newspapers exaggerated the declines by creating “a false impression that the whole industry is ‘dying’ . . . when in fact they are doing well in small U.S. markets” (Chyi, Lewis, & Zheng, 2012, p. 316). The death of newspapers has nonetheless been assumed by many to be ongoing as a result of the closure of numerous titles and the bankruptcy of some major chains. The bankruptcies have invariably been a result of high levels of debt taken on in making pre-recession acquisitions, however, which owners were then unable to service with reduced earnings. The firms were otherwise profitable, and they continued to publish newspapers under reorganized, less indebted ownership (Edge, 2014). </div>
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Closures have often been attributed by owners to a lack of profitability, but such claims can rarely be verified because earnings for individual titles are not often available in company financial reports. Profitability can thus only be inferred from overall results, and it has undeniably been falling in what was once among the most lucrative of all industries. A pattern of closures of competing titles to create more profitable monopoly markets, however, suggests possible collusion between owners to boost their bottom lines. </div>
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<b>Newspaper closures in Canada</b></div>
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The number of paid daily newspapers in Canada was stable for decades at around 100 until the recession of 2008-09, when several minor titles fell by the wayside. The Halifax Daily News, that city’s second-place newspaper, was closed in 2008 but immediately resurrected as an edition of the free commuter tabloid Metro (Morrissy, 2008). In Manitoba, the Flin Flon Reminder reduced its publication frequency to thrice weekly in 2009, while in Ontario the Cobourg Star and the Port Hope Evening Guide merged as Northumberland Today. That brought the number of paid dailies in Canada to 96, and despite widespread predictions of the death of newspapers as a medium the number stabilized over the next few years. A series of closures by two B.C. chains since 2010, however, helped to drop the number into the low 80s by 2016. News Media Canada data show that of the thirteen paid daily newspapers that were closed, merged, or changed publication frequency in Canada between 2010 and 2016, nine were published in B.C. and owned by Black Press (six) or Glacier Media (three). (See Table 1) </div>
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<div style="text-align: center;">
<b>Table 1 – Daily Newspaper Closures in Canada 2010-16</b></div>
Title Prov. Owner Circulation* Notes<br />
1. Prince Rupert Daily News BC Black Press 2,800 closed 7/10<br />
2. Nelson Daily News BC Black Press 3,300 closed 7/10<br />
3. Portage LaPrairie Graphic MB Quebecor 2,088 weekly 3/13<br />
4. Amherst Daily News NS Transcontinental 2,593 weekly 8/13<br />
5. Kamloops Daily News BC Glacier Media 9,235 closed 1/14<br />
6. Dawson Creek News BC Glacier Media 1,470 merged 2/14<br />
7. Alberni Valley Times BC Black Press 3,088 closed 10/15<br />
8. Guelph Mercury ON Torstar Corp. 9,371 closed 1/16<br />
9. Nanaimo Daily News BC Black Press 3,898 closed 1/16<br />
10. Alaska Highway News BC Glacier Media 2,143 weekly 3/16<br />
11. Cranbrook Daily Townsman BC Black Press 2,485 3Xweek 4/16<br />
12. Kimberley Daily Bulletin BC Black Press 1,204 3Xweek 4/16<br />
13. Fort McMurray Today AB Postmedia 1,722 weekly 11/16<br />
* average paid daily circulation<br />
Source: News Media Canada</div>
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<br /></div>
<div>
These two companies have bought, sold, and traded newspapers back and forth in a series of transactions that were usually followed – immediately or eventually – by the closure of competing titles. All of the daily newspapers lost in B.C. this decade were owned either by Glacier Media or Black Press. Most of the dailies that have been closed in Canada since 2010 suffered that fate soon after Glacier Media or Black Press acquired it from the other. </div>
<div>
<br />
<b>Black Press</b></div>
<b></b><br />
<div>
David Black began buying community newspapers in the Interior of B.C. in 1975 and then on Vancouver Island, where he soon owned twenty-one titles. His company Black Press bought a chain of thirty-three B.C. and Alberta newspapers in 1997 from UK-based Trinity International Holdings which doubled its annual revenues and made it for a time Canada’s largest publisher of non-daily newspapers (Verburg, 1998). In 2002, Black sold a 19.35 percent interest in his company for $20 million to Torstar, his former employer, with the understanding it could acquire the rest when the 57-year-old Black retired (Blackwell, 2003). Black broke into the major metropolitan daily newspaper business in 2001 by buying the Honolulu Star-Bulletin, then added the larger Honolulu Advertiser in 2010 and merged them as the Star-Advertiser (Wilson, 2010). Advertising rates soon soared in this monopoly, according to Hawaii Business magazine, with prices “sometimes doubling or tripling” (Burris & Creamer, 2011). Black Press was also controversial for its business practices in Canada. In 1998, it ordered its newspapers to editorially oppose a treaty between the B.C. government and the Nisga’a native band because Black claimed an advertising campaign urging its ratification was one-sided and misleading. The B.C. Press Council dismissed a complaint about the edict, however, ruling that “the right to direct editorial policy rests with the owner” (McCulloch, 1999). In 2007, Black Press fired a Victoria News reporter after local auto dealers complained about a story he wrote on how to buy a car in the U.S. (Holman, 2007). By 2017, Black Press was the largest publisher of non-daily newspapers in B.C., with 91 titles circulating almost two million copies a week. It ranked third nationally behind only Transcontinental and Torstar’s Metroland division (News Media Canada, 2017).</div>
<div>
<br />
<b></b><br />
<a name='more'></a><b>Glacier Media</b></div>
<b></b><br />
<div>
This former bottled water company was bought by Vancouver real estate developer Sam Grippo in 1998 and initially owned a number of business publications, including the Western Investor and Business in Vancouver (Lazarus, 2006). Grippo’s company Madison Venture Corp. had partnered with Southam Inc. in 1990 to form a chain called Lower Mainland Publishing that bought fourteen Vancouver-area newspapers. It was unwound eight years later, however, when Southam reached an agreement with the Competition Bureau to lessen its dominance in the Vancouver market (Waldie, 1998). Glacier bought more than thirty B.C. newspapers and numerous business publications from Hollinger Inc. in a 2006 purchase that reportedly shocked the newspaper industry. Noted the Globe and Mail: “Glacier, a company with a paltry $141-million market value somehow outmanoeuvred multibillion-dollar rivals that coveted specific chunks of the Hollinger assets” (Robertson, 2006). A second major purchase of B.C. newspapers from Postmedia in 2011 established Glacier as a leading regional publisher. It included the province’s third-largest daily, the Victoria Times Colonist, along with twenty other titles, including two more dailies and the thrice-weekly Vancouver Courier. Glacier soon ranked as Canada’s largest publisher of trade publications, including in the agriculture, energy, and mining industries, when it bought fifteen such titles from Rogers Publishing (Lazarus, 2011). By 2017, it was the second largest publisher of non-daily newspapers in B.C. with 60 titles circulating a million copies a week (News Media Canada, 2017).</div>
<div>
<br />
<b>Daily newspaper closures</b></div>
<b></b><br />
<div>
Glacier Media sold eleven newspapers to Black Press in 2010, including the 109-year-old Nelson Daily News and the 99-year-old Prince Rupert Daily News, both of which Black announced would be closed (Korstrom, 2010). Black Press already owned two non-daily newspapers in the Prince Rupert area and the weekly Star in Nelson, which it soon began publishing twice weekly. Its CEO claimed the closed papers had lost more than $1 million in 2009 and that Black Press had bought them only because Glacier insisted on selling the titles as a group (Hoggan, 2010; Korstrom, 2010). At the same time, former Black Press executive Don Kendall also purchased the Cranbrook Daily Townsman and the Kimberley Daily Bulletin from Glacier. Just over a year later, Black Press bought those titles from Kendall and converted them to thrice weekly publication. It already owned the Cranbrook-based Kootenay News Advertiser, which published twice weekly, and most of the other community newspapers in the Kootenay region of eastern B.C. (Trail Times, 2011).</div>
<div>
<br />
In January 2014, Glacier closed the Kamloops Daily News, which it had acquired from Hollinger in 2006, saying it had been “unable to reduce expenses sufficiently for it to continue as a viable operation” (Kamloops Daily News, 2014). Black Press had sold its twice weekly Kamloops This Week in 2010 to Kelowna-based Aberdeen Publishing, with which Black had often co-operated, sharing presses and reportedly even content (B.C. Reporter, 2012). With the closure of the Daily News, Aberdeen increased publication of Kamloops This Week to thrice weekly (O’Connor, 2015). A spokesman for industry group Newspapers Canada insisted that its members were healthy despite the closure, as revenue had been stable in recent years (Lee, 2014).</div>
<div>
<br />
In December 2014, Black Press and Glacier Media traded fourteen titles, with Black acquiring every newspaper it did not already own on Vancouver Island (pop. 750,000), except for Glacier’s Times Colonist (Bradshaw, 2014). Included were two dailies, the Alberni Valley Times and the Nanaimo Daily News, both of which were soon closed. Black Press already published the twice-weekly Alberni Valley News and it closed the Alberni Valley Times the following October. In Nanaimo, Black Press thus owned all three newspapers: the weekly Harbour City Star, which it also acquired from Glacier and closed immediately; its own twice-weekly News Bulletin; and the Daily News, which it closed in early 2016 (Wilson, 2014). Glacier received three suburban Vancouver titles in exchange plus an undisclosed amount of cash (Bradshaw, 2014). The Vancouver alt-weekly Georgia Straight noted the monopolistic nature of the deal.</div>
<blockquote class="tr_bq">
In effect, it appears as though the two publishing giants are dividing up the southwestern B.C. market, with Glacier taking control over the western section of the Lower Mainland and Black Press being left with most of Vancouver Island and the Fraser Valley (Smith, 2014).</blockquote>
<div>
<b>Community newspaper closures</b></div>
<b></b><br />
Their 2014 swap of newspapers was not the first time Black Press and Glacier Media had exchanged titles. They made their first trade in October 2013 when Black Press acquired the Fraser Valley community newspapers Abbotsford/Mission Times and Chilliwack Times, which it soon closed to create monopolies for its News titles in both markets. Glacier received four newspapers in return, including the North Shore Outlook in North Vancouver, where it also owned the North Shore News (Do, 2013). It closed the Outlook the following March, but not before turning it, according to the Langara Journalism Review, “into a vehicle heavy on ads and light on anything that resembles journalism” (Jonca, 2015). Glacier also closed several long-publishing community newspaper competitors it acquired from Black Press in the Vancouver suburbs. Noted B.C. Business magazine: <br />
<blockquote class="tr_bq">
“It is by now a familiar script. Through horse-trading, Glacier Media or Black Press . . . become the sole owners of a community’s weeklies. And then one of those papers shuts down” (Parry, 2015). </blockquote>
In April 2017, Black Press created one of Western Canada’s largest non-daily newspapers when it merged the 117,000 circulation Surrey Now, which it had acquired from Glacier in late 2014, with its 82,000 circulation Surrey Leader as the twice-weekly Surrey Now-Leader (Tri-Cities Now, 2017). In December, Glacier closed the weekly Westender it had bought from Black Press in Vancouver, where it already owned the Courier. That brought to twenty the number of newspapers lost to closure or merger from the thirty-three which Glacier Media and Black Press had exchanged, either directly or through related parties. Four other newspapers one of them already owned were also closed after it acquired a competitor in the same market, for a total of twenty-four newspapers lost via closure or merger following their dealings. (See Table 2)<br />
<div>
<br />
<div style="text-align: center;">
<b>Table 2</b></div>
<div style="text-align: center;">
<b>Black Press and Glacier Media acquisitions</b></div>
</div>
<div>
newspaper type region year acquirer circulation notes<br />
1. Trail Daily Times paid daily Kootenay 2010 Black 5,002<br />
2. Creston Valley Advance paid weekly Kootenay 2010 Black 2,869<br />
3. Fernie Free Press paid weekly Kootenay 2010 Black 1,775<br />
4. Grand Forks Gazette weekly Kootenay 2010 Black 2,479<br />
5. Nelson Daily News paid daily Kootenay 2010 Black 3,300 closed 9/10<br />
6. Prince Rupert Daily News paid daily North Coast 2010 Black 2,800 closed 7/10 <br />
7. Quesnel Advisor free weekly Interior 2010 Black 8,156 closed 7/10<br />
8. Cariboo Observer free weekly Interior 2010 Black 9,940<br />
9. 100 Mile House Advisor free weekly Interior 2010 Black 7,426 closed 7/10<br />
10. Coast Mountain News free weekly North Coast 2010 Black 1,200<br />
11. Cranbrook Townsman paid daily Kootenay 2011 Black* 3,280 went 3X weekly 4/16<br />
12. Kimberley Daily Bulletin paid daily Kootenay 2011 Black* 1,660 went 3X weekly 4/16<br />
13. North Shore Outlook free weekly Vancouver 2013 Glacier 56,076 closed 3/14<br />
14. Vancouver Westender free weekly Vancouver 2013 Glacier 39,730 closed 12/17<br />
15. South Delta Leader free weekly Vancouver 2013 Glacier 16,600 closed 2014<br />
16. Bowen Island Undercurrent paid weekly Vancouver 2013 Glacier 926<br />
17. Abbotsford-Mission Times free twice weekly Fraser Valley 2013 Black 45,409 closed 11/13<br />
18. Chilliwack Times free twice weekly Fraser Valley 2013 Black 30,550 closed 12/16<br />
19. Tri-City News free twice weekly Vancouver 2014 Glacier 53,062 <br />
20. Burnaby NewsLeader free twice weekly Vancouver 2014 Glacier 45,596 closed 9/15<br />
21. Richmond Review free twice weekly Vancouver 2014 Glacier 46,754 closed 7/15<br />
22. New Westminster NewsLeader free twice weekly Vancouver 2014 Glacier 15,703 closed 9/15<br />
23. Nanaimo Daily News paid daily Vancouver I. 2014 Black 3,918 closed 1/16<br />
24. Alberni Valley Times paid daily Vancouver I. 2014 Black 3,088 closed10/15<br />
25. Surrey Now free twice weekly Vancouver 2014 Black 117,579 merged 3/17<br />
26. Langley Advance free twice weekly Vancouver 2014 Black 40,122 went weekly 3/15<br />
27. Maple Ridge Times free twice weekly Vancouver 2014 Black 30,387 merged 9/16<br />
28. Nanaimo Harbour Star free weekly Vancouver I. 2014 Black 27,795 closed 4/15<br />
29. Cowichan Valley Citizen free twice weekly Vancouver I. 2014 Black 23,679<br />
30. Comox Valley Echo free twice weekly Vancouver I. 2014 Black 22,285 merged 4/17<br />
31. Campbell River Courier-Islander free twice weekly Vancouver I. 2014 Black 17,127 closed 4/15<br />
32. Parksville Oceanside Star free weekly Vancouver I. 2014 Black 16,243 closed 4/15<br />
33. Tofino-Ucluelet News free weekly Vancouver I. 2014 Black 987<br />
Source: News Media Canada <br />
* from Don Kendall</div>
<div>
<br />
A 2017 report on Canada’s local news media by a Parliamentary committee which studied it for sixteen months noted that the number of community newspapers in Canada had been stable since 2011 at just over 1,000, which makes the disappearance of B.C. titles even more stark (Canada, 2017). </div>
<div>
<br />
<b>Financial considerations</b></div>
<b></b><br />
<div>
<br />
Glacier Media was a public company whose shares traded on the Toronto Stock Exchange, so it was required to issue quarterly financial reports. Like all publicly-traded newspaper companies, its share price plunged during the 2008-09 recession amid fears of extinction, from more than $4 to less than $1.50, and its share price stagnated despite a rebound in its earnings when the economy recovered. “Glacier Media’s stock has basically been given up for dead,” quipped a Globe and Mail analyst in early 2013, who noted the company had even started paying dividends in 2011 (Rothery, 2013). Glacier announced a program of “value enhancement initiatives” in November 2013 which included outsourcing advertising production to India and the Philippines, and the moves helped Glacier’s share price rebound (Bouw, 2014). While it topped $1.50 in late 2014 and early 2015, however, its share price crashed in mid-2015 to below 75 cents, where it languished. </div>
<div>
<br />
One former publisher read a 2015 Glacier Media quarterly report to mean it had “pretty much given up on a long-term future for its 30 newspapers across B.C.,” and intended to shift into more lucrative areas of investment. “Newspapers are in decline,” noted blogger Paul Willcocks (2015). “The company’s plan is to extract cash during their remaining time and invest it in businesses with growth prospects.” Willcocks pointed out that Glacier was making a greater return from its business information division. “Newspaper profit margins are shrinking. On an operating basis, the business information division produced earnings equal to 27 per cent of revenue; for newspapers the return is nine per cent” (Willcocks, 2015). Glacier Media’s second quarter earnings report for 2015, he noted, made it clear that the company intended to “harvest” the assets of its community newspapers. “These operations generate significant cash flow and provide scale for the Company,” it stated. “Efforts will be made to restructure community media assets to create greater direct value and simplicity for Glacier, or monetize where appropriate value can be realized” (Glacier Media, 2015, p. 2).</div>
<blockquote class="tr_bq">
The Company’s objective is to grow its business information assets and the portion of cash flow generated by these operations, which have higher growth profiles and valuations, and harvest the cash flow from community media assets and reduce the related financial and operating exposure (Glacier Media, 2015, p. 2).</blockquote>
<div>
Glacier Media stopped paying dividends in mid-2015, saving it about $7 million a year (Canadian Press, 2015). The company was still profitable, but it never regained its high profit levels from before the recession. In 2007 and 2008, its return on revenue had been greater than 20 percent, but by 2015 it had fallen into the single digits before rebounding slightly in 2016. (See Table 3)</div>
<div>
<br />
<b>Table 3 – Glacier Media earnings</b></div>
<div>
<b> Revenues (millions) Earnings* (millions) Profit Margin (%)</b></div>
<div>
2016 199 19 9.4<br />
2015 221 17 7.8<br />
2014 248 29 11.7<br />
2013 295 33 11.1<br />
2012 330 50 15.3<br />
2011 267 49 18.4<br />
2010 242 44 18.1<br />
2009 229 36 15.6<br />
2008 249 52 20.8<br />
2007 216 47 21.9<br />
* before interest, taxes, depreciation, and amortization<br />
Source: Company annual reports</div>
<div>
<br /></div>
<div>
Black Press, by contrast, was a private company that did not sell shares publicly and thus was not required to disclose its financial performance. Because it was partly owned by publicly-traded Torstar, however, its earnings could be inferred from Torstar’s financial reports. Torstar reported in its annual reports the earnings it received from its 19.35 percent ownership in Black Press. The total earnings of Black Press could thus be calculated by multiplying Torstar’s share by 19.35 percent. (See Table 4)</div>
<div style="text-align: left;">
<b>Table 4 – Black Press earnings*</b></div>
<div style="text-align: left;">
<b>(millions)</b></div>
<div>
<div style="text-align: left;">
2016 $28.9</div>
<div style="text-align: left;">
2015 $15.5</div>
<div style="text-align: left;">
2014 $20.1</div>
<div style="text-align: left;">
2013 $28.3</div>
<div style="text-align: left;">
2012 $20.1</div>
<div style="text-align: left;">
2011 $17.0</div>
<div style="text-align: left;">
2010 $17.0</div>
<div style="text-align: left;">
2009 $12.9</div>
<div style="text-align: left;">
* before interest, taxes, depreciation, and amortization</div>
<div style="text-align: left;">
Source: Calculated from Torstar Corp. annual reports</div>
<br /></div>
<div>
<b>Conclusions</b></div>
<div>
<b><br /></b></div>
<div>
Newspaper companies have had to take drastic measures in order to keep their heads above water, including cost cutting and consolidation, but they have proved remarkably resilient. One fatalistic strategy adopted by some publishers in the face of a feared extinction, however, has been harvesting, as Glacier is speculated to have done. “This is the ‘take-the-money-and-run’ plan,” noted Meyer (2009, p. 37). </div>
<blockquote class="tr_bq">
It means raising prices, reducing quality, and taking as much money of the firm as possible. . . . There are very strong indications that [newspaper companies] are drifting in that direction, egged on by short-term investors. </blockquote>
<div>
Publicly-traded newspaper companies have been found to engage in short-term decision making because investors tend to focus on stock price movement and quarterly earnings (Cranberg, Bezanson, & Soloski, 2001). Because Glacier Media was a publicly-traded company, the drop in its profit margin from more than 20 percent in 2008 to less than 10 percent in 2013 likely subject it to the kind of short-term pressure found to characterize companies that sell shares on the stock market. This could have provided sufficient incentive for it to engage in the 2013 and 2014 trades and subsequent closures, especially after the closures following its 2010 sales to Black Press had gone unchallenged by the Competition Bureau. While Black Press was not publicly traded, it also had a partner whose financial expectations it had to consider. The earnings of both Black Press and Glacier Media increased in 2016 after several years of decline, which suggests the companies’ strategic trade-and-close strategy improved their bottom lines. It would not be the first time collusion had been seen in Canadian newspapers. Sotiron (1992, p. 26) chronicled industry such behaviour a century earlier. “The economic realities of competition forced key publishers . . . to adopt alternative strategies of predatory competition and that of cooperation or collusion which resulted in an increasingly concentrated industry.” </div>
<div>
<br />
Collusion with a corporate competitor is supposed to be illegal, yet the behaviour outlined in this case study did not result in enforcement action by the Competition Bureau despite a pattern of behaviour by the chains that suggests they colluded on a trade-and-close strategy. A 2006 Senate report on news media accused the Competition Bureau of nothing less than “neglect” for failing to curb concentration of its ownership (Canada, 2006, p. 15). It recommended changes to the Competition Act to treat mergers and acquisitions of media firms differently than those in other industries, and the 2017 Heritage ministry report on local news provision renewed that recommendation (Canada, 2017). According to a Competition Bureau spokesman, the period during which the Black Press-Glacier Media dealings could be reviewed expired after one year (D. Corriveau, personal communication, September 26, 2017). As part of its investigation into the Postmedia-Torstar trade and closures, however, it would behoove the Competition Bureau to at least examine the B.C. deals to better understand the subsequent closure and merger of many local news sources and determine whether there was any quid pro quo involved.<br />
<br />
<b>References</b></div>
<div>
<b></b><br />
Bagdikian, B. (1983). <i>The media monopoly</i>. Boston: Beacon Press.</div>
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Blackwell, R. (2003, September 20). Torstar sees big future in its stake of B.C.-based Black Press. <i>Globe and Mail</i>, p. B3.</div>
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Bouw, B. (2014, April 2). Glacier carves out a niche in grim sector. <i>Globe and Mail</i>, p. B12.</div>
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Krashinsky Robertson, S. (2017). Postmedia, Torstar to swap and shutter dozens of local newspapers. <i>Globe and Mail</i>, November 28, p. A1. </div>
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Lacy S., & Simon, T. F. (1993). <i>The economics and regulation of United States newspapers</i>. Norwood, NJ: Ablex.</div>
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<div>
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Lazarus, E. (2011, December 12). Rising in the west. <i>Marketing</i>, 116(18), 23-27.</div>
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Lee, J. (2014, January 6). Newspapers healthy despite Kamloops Daily News closure, industry spokesman says. <i>Vancouver Sun</i>. Retrieved from http://www.vancouversun.com/news/Newspapers+healthy+despite+Kamloops+Daily+News+closure+industry+spokesman+says/9355158/story.html#ixzz2pqc1Sd00</div>
<div>
<br /></div>
<div>
McCulloch, S. (1999, February 24). Press council sides with publisher Black. <i>Victoria Times-Colonist</i>, p. A6.</div>
<div>
<br /></div>
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Meyer, P. (2009). <i>The vanishing newspaper: Saving journalism in the information age</i> (2nd ed.). Columbia, MO: University of Missouri Press.</div>
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O’Connor, A. (2015, January 13). Kamloops no longer has a daily paper, but it’s no town without news. <i>Ryerson Review of Journalism</i>. Retrieved from http://rrj.ca/kamloops-no-longer-has-a-daily-paper-but-its-no-town-without-news/</div>
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Parry, J. (2015, July 22). Who is killing the community newspaper? <i>B.C. Business</i>. Retrieved from https://www.bcbusiness.ca/who-is-killing-the-community-newspaper </div>
<div>
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Robertson, G. (2006, January 26). Heat’s on, but Glacier not retreating. <i>Globe and Mail</i>, p. B3.</div>
<div>
<br /></div>
<div>
Robertson, G., & Waldie, P. (2006, January 21). Rivals riled over Hollinger Int’l sales. <i>Globe and Mail</i>, p. B3.</div>
<div>
<br /></div>
<div>
Rothery, N. (2013, February 8). A media stock that’s worth buying. No, really. <i>Globe and Mail</i>, p. B10. </div>
<div>
<br /></div>
<div>
Smith, C. (2014, December 17). Glacier and Black Press newspaper deal reduces competition in Lower Mainland and Fraser Valley. <i>Georgia Straight</i>. Retrieved from http://www.straight.com/news/791601/glacier-and-black-press-newspaper-deal-reduces-competition-lower-mainland-and-fraser-valley</div>
<div>
<br /></div>
<div>
Sotiron, M. (1992). Concentration and collusion in the Canadian newspaper industry, 1895-1920. <i>Journalism History</i>, 18(1), 26-32.</div>
<div>
<br /></div>
<div>
Trail Times. (2011, July 27). Black Press buys Cranbrook, Kimberley dailies. <i>Trail Times</i>. Retrieved from http://www.trailtimes.ca/business/black-press-buys-cranbrook-kimberley-dailies/</div>
<div>
<br /></div>
<div>
Tri-Cities Now. (2017, March 23). Exciting changes coming to the ‘Now’ and ‘Leader’: Two iconic Black Press titles will become one. <i>Tri-Cities Now</i>, p. A1. </div>
<div>
<br /></div>
<div>
Van der Burg, M., & Van den Bulck, M. (2017). Why are traditional newspaper publishers still surviving in the digital era? The impact of long-term trends on the Flemish newspaper industry’s financing, 1990-2014. <i>Journal of Media Business Studies</i>, 14(2), 82-115.</div>
<div>
<br /></div>
<div>
Verburg, P. (1998, June 26). Battle of the Blacks. <i>Canadian Business</i>, 71(11), 78-82.</div>
<div>
<br /></div>
<div>
Waldie, P. (1998, September 22). Southam to sell 10 small B.C. publications. <i>Globe and Mail</i>, p. B6.</div>
<div>
<br /></div>
<div>
Willcocks, P. (2015, August 21). Glacier Media, and more bad news for the future of newspapers. <i>Paying Attention</i>. Retrieved from http://willcocks.blogspot.ca/2015/08/glacier-media-and-more-bad-news-for.html</div>
<div>
<br /></div>
<div>
Wilson, C. (2010, February 27). Black buys second Honolulu daily. <i>Vancouver Sun</i>, p. G1.</div>
<div>
<br /></div>
<div>
Wilson, C. (2014, December 17). Black Press purchases Island newspapers from Glacier Media. <i>Victoria Times Colonist</i>. Retrieved from http://www.timescolonist.com/news/local/black-press-purchases-island-newspapers-from-glacier-media-1.1686405#sthash.vBOyLRCM.dpuf</div>
<div>
<br /></div>
<br />Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-80750194306926258882018-01-27T01:09:00.000-08:002018-01-27T01:22:36.525-08:00Supreme Court ruling makes need for Competition Act reform urgent <i>The following originally appeared in </i><a href="https://theconversation.com/supreme-court-ruling-makes-need-for-competition-act-reform-urgent-89985" target="_blank">The Conversation</a><i> and was reprinted on the </i><a href="http://nationalpost.com/pmn/news-pmn/supreme-court-ruling-makes-need-for-competition-act-reform-urgent" target="_blank"><span style="font-family: "times new roman"; font-size: 12.0pt;">National Post</span></a><i><i><span style="font-family: "times new roman"; font-size: 12.0pt;"> </span></i><span style="font-family: "times new roman"; font-size: 12.0pt;">website, on Cartt.ca</span> </i><i>(subscription), </i><i><i>and on </i></i><a href="https://j-source.ca/article/supreme-court-ruling-makes-need-competition-act-reform-urgent/" target="_blank">J-source.ca</a><i>. </i><i><i><br /></i></i><br />
History’s habit of repeating itself has
once again hamstrung Canadian antitrust law when it comes to preventing media
monopolies. This time, however, the Supreme Court of Canada has left the door
wide open to once again increasing our <a href="http://cjms.fims.uwo.ca/issues/14-01/edge.pdf" target="_blank">already world-leading </a>levels of media
ownership concentration.<br />
<br />
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The decision to allow a
<a href="http://www.thelitigator.ca/2015/02/efficiencies-save-landfill-merger-supreme-court-rules/" target="_blank">hazardous waste landfill monopoly</a> in northern B.C. went little noticed at the
time outside the competition law community. It triggered long dormant
provisions in the Competition Act, however, that make preventing monopolies much
more difficult, especially in vulnerable media industries. It set a precedent
that prioritized cost-cutting “efficiencies” and, in some very poor timing, was
soon followed by federal approval of yet another “devastating” <a href="https://www.thestar.com/business/2014/10/06/postmedia_buys_175paper_sun_media_for_316m.html" target="_blank">news media merger</a>, as a parliamentary report would describe it.. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
This points up once again the
need for reform of the Competition Act, as has been urged by successive federal
media inquiries dating back a dozen years. After all, covering the news more
“efficiently” with fewer and fewer journalists employed by bigger and bigger
media monopolies can’t be good for democracy. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
When the Competition Act was enacted
in 1986, it aim was to use civil procedures such as court orders to prevent
monopolies better than the old antitrust law had by using criminal charges. Not
a single merger case had been successfully prosecuted under the Combines
Investigation Act in its 76-year life due to the higher criminal burden of
proof beyond a reasonable doubt.</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The Combines Investigation Act had
been rendered ineffective against media monopolies in particular by a 1972 Supreme
Court of Canada ruling. Prosecutors initially won a conviction on charges of
monopoly against the Irving Oil family, which had<span style="mso-ansi-language: EN-GB;"> <span lang="EN-GB">acquired</span></span><span lang="EN-GB"> </span><a href="http://www.cjc-online.ca/index.php/journal/article/view/2578" target="_blank">all five daily newspapers in New Brunswick.</a><b> </b><span style="mso-spacerun: yes;"></span>It was overturned on appeal, however, after
the Supreme Court ruled the crown must prove not only a lessening of
competition but also a detriment to the public. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The Irving
press monopoly persists to this day as a result, allowing <a href="http://www.nationalobserver.com/2016/07/06/news/irvings-media-monopoly-and-its-consequences" target="_blank">little news coverage</a> of the family’s economic dominance of that province. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The </span>Competition
Act, according to <a href="https://www.jstor.org/stable/41798790?seq=1#page_scan_tab_contents" target="_blank">one legal scholar, </a>“literally rewrote the book on competition law in Canada,
particularly with regard to merger control and the review of the activities of
dominant firms.” It has unfortunately proved just as incapable of preventing
media monopolies, and now the Supreme Court has made its job even more
difficult, if not impossible. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt;">
As a <a href="https://sencanada.ca/content/sen/committee/391/tran/rep/repfinjun06vol1-e.htm" target="_blank">2006 Senate report on news media </a>pointed out, the Competition Act allows only economic factors, such as advertising
revenues, to be considered in adjudicating mergers and takeovers. “The result,”
the Senators noted, “has been extremely high levels of news media concentration
in particular cities or regions.” They recommended allowing a panel of experts to
review media mergers and take the public interest into account. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; margin-left: 0in; margin-right: 0in; margin-top: 12.0pt;">
It didn’t happen because a deregulationist Conservative
government led by Stephen Harper had already gained power in Ottawa
and would hold it for almost a decade. It presided over even more consolidation
of Canada’s
newspaper industry, including the takeover of our largest and then
second-largest chain by U.S.
hedge funds, despite supposed limits on foreign ownership. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The Competition Bureau, which
enforces the Competition Act, approved the 2014 takeover of Sun Media by
Postmedia Network without holding hearings. It oddly concluded the sale was “unlikely
to substantially lessen or prevent competition” despite it giving Postmedia 21
of the country’s 25 largest newspapers, including eight of the nine largest in
Western Canada and both dailies in four of our six largest cities. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
Postmedia said it expected to
save $6-10 million in cost cutting efficiencies from the takeover. It promised,
however, that the competing newspapers it acquired in Calgary,
Edmonton, and Ottawa
would maintain separate newsrooms, as its dailies in Vancouver
had for decades, by government order. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
Falling ad revenues, however, soon
forced Postmedia to seek another $50 million in efficiencies, mostly to service
the company’s massive high-interest debt held by its own hedge fund masters. It
thus announced in early 2016 that, despite promising not to, it would merge the
newsrooms of its four newspaper duopolies, including in Vancouver.
</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
A parliamentary committee chaired
by Vancouver MP Hedy Fry quickly convened hearings into media and local
communities, at which Competition Bureau officials testified they were
powerless to stop the consolidation. The Fry committee’s report issued in
mid-2017 renewed the call made by senators for reform of the Competition Act.</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
<a href="http://www.cjc-online.ca/index.php/journal/article/view/3196" target="_blank">My research</a><b> </b>has found that the Supreme Court of Canada ruling in the case of <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/14603/index.do" target="_blank">Tervita v. Canada,</a> set a precedent against preventing what the Fry report called a “devastating” news
media merger. Even worse, the ruling enables even more mergers by badly hobbling
the Competition Bureau. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The judgment was delivered in
early 2015, even as Postmedia’s takeover of Sun Media was under federal review.
In allowing the hazardous waste monopoly the Competition Bureau had blocked, the
Supreme Court required the feds to quantify the anti-competitive effects of a
merger or takeover. If their calculated dollar value does not outweigh the efficiencies
that acquiring companies show will result from the deal, it must be allowed
despite otherwise amounting to an illegal monopoly. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The so-called “efficiencies
defence” had always been in the Competition Act, but it went untested for
almost 40 years before the Supreme Court ruling gave it life. The defence was “unique
among competition/antitrust statutes around the world,” according to <a href="http://www.oecd.org/competition/mergers/2379526.pdf" target="_blank">one analysis.</a><b> </b><span style="mso-spacerun: yes;"></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
It was included because the then-Conservative
government “had high hopes that it would play a significant role in
facilitating efficient restructuring in Canada.”
Those hopes went unrealized, however, and with the Tervita ruling the provision
seems to have now backfired.</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The effect of the ruling,<a href="http://www.mondaq.com/canada/x/376980/M+A+Private%20equity/Tervita+Corpv+Canada+Commissioner+Of+Competition+A+Rare+Supreme+Court+Decision+On+Merger+Review+And+The+Potential+Impacts+For+The+Oil+And+Gas+Industry" target="_blank"> lawyers noted, </a>was to raise the bar for the Competition Bureau to prevent monopolies. It put <span style="font-family: "advp7b6c"; mso-bidi-font-family: AdvP7B6C;">Canadian merger law,
</span>according to <a href="http://journals.sagepub.com/doi/abs/10.1177/0003603X16657216" target="_blank">a pair of economists,</a><b> </b><span style="font-family: "advp7b6c"; mso-bidi-font-family: AdvP7B6C;">“far out in
front of the wave” </span>of integrating economic principles into merger law.
It prompted Competition Bureau head John Pecman<span style="font-family: "advp7b6c"; mso-bidi-font-family: AdvP7B6C;"> to boast <a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03873.html" target="_blank">in a speech to lawyers</a><b> </b></span><span style="font-family: "advp7b6c"; mso-bidi-font-family: AdvP7B6C;">that </span>economists<span style="font-family: "advp7b6c"; mso-bidi-font-family: AdvP7B6C;"> are now the “</span>rock
stars of competition law enforcement.” </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The Competition Bureau,
however, did not quantify the anti-competitive effects of the Sun Media takeover
to weigh them against Postmedia’s planned corporate efficiencies. It simply
rubber stamped the deal using some very questionable logic.</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The savings available from
mergers of news media companies are considerable, but they invariably involve
cuts to expensive journalism. The cost to the public of a reduction in news
coverage is arguably the impairment of democracy, but how do you put a dollar
figure on that?</div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-85469071266368333402018-01-04T00:01:00.003-08:002018-01-14T04:24:46.076-08:00Year of reckoning looms for Canada’s newspapers<i>The following originally appeared in </i><a href="https://theconversation.com/year-of-reckoning-looms-for-canadas-newspapers-89066" target="_blank">The Conversation</a><i> and was reprinted by </i><a href="https://www.nationalnewswatch.com/2018/01/02/year-of-reckoning-looms-for-canadas-newspapers/#.Wk3k1zdG02w" target="_blank">National Newswatch</a><i>, the </i><a href="http://nationalpost.com/pmn/news-pmn/year-of-reckoning-looms-for-canadas-newspapers" target="_blank">National Post</a><i>, the </i><a href="https://www.thestar.com/opinion/contributors/2018/01/03/year-of-reckoning-looms-for-canadas-newspapers.html" target="_blank">Toronto Star</a><i>, the </i><a href="https://www.winnipegfreepress.com/opinion/analysis/feds-dither-as-newspapers-face-year-of-reckoning-468205663.html" target="_blank">Winnipeg Free Press</a>,<i> </i><a href="https://thetyee.ca/Mediacheck/2018/01/03/Ottawas-Last-Chance-to-End-Gutting-of-Newspapers/" target="_blank">The Tyee</a><i>, </i><a href="http://www.friends.ca/news-item/14926" target="_blank">Friends.ca</a><i>, </i><a href="http://j-source.ca/article/year-reckoning-looms-canadas-newspapers/" target="_blank">J-source.ca</a><i> </i><i><i>and </i>the </i><a href="https://blog.wan-ifra.org/2018/01/10/year-of-reckoning-looms-for-canada-s-newspapers" target="_blank">WAN blog</a><i>. That's a record!</i><br />
<br />
As 2018 dawns, Canada’s
news media are in danger of lurching into the abyss unless Ottawa
takes action soon.<br />
<br />
Enforcing our country’s anti-trust laws to stop the corporate consolidation
and cutbacks in local news coverage would help to stanch the bleeding in the
short term, but Canada’s
Competition Bureau has shown little <a href="https://thetyee.ca/Mediacheck/2016/01/23/Postmedia-Crisis-Competition-Bureau/" target="_blank">interest</a>
in taking such action.<br />
<br />
More long-term measures, similar to those taken in other countries, are also
needed to strengthen media policy in Canada
to help protect news from the depredations of Darwinian capitalism and
encourage the growth of digital journalism as old media fade away.<br />
<br />
Whether our government has the foresight needed for this kind of bold action
should become clear in 2018. More likely is continued inaction given Ottawa’s
demonstrable blind spot when it comes to journalism.<br />
<br />
When the country’s two largest chains swapped 41 newspapers in Ontario
a few weeks ago and announced that almost all would be closed, they basically
thumbed their noses at Canada’s
competition laws.<br />
<br />
Why wouldn’t they?<br />
<br />
<aside class="aside hide-on-narrow-vp" data-dev-object-descrip="01-molecules/blocks/aside" data-dev-status="IN-PROGRESS"><aside class="aside " data-dev-object-descrip="01-molecules/blocks/aside" data-dev-status="IN-PROGRESS"><section class="messaging-block messaging-block--ask" data-dev-object-descrip="01-molecules/blocks/messaging-block--ask" data-dev-status="IN-PROGRESS">Monopoly is much better for business than competition, and for years the
Competition Bureau has proved powerless — or unwilling — to stop Big Media from
growing even bigger.<br />
<br />
In the November deal, Postmedia Network and the Torstar Corp. <a href="https://thetyee.ca/Mediacheck/2017/11/27/Postmedia-Torstar-Media-Monopolies/" target="_blank">divided up</a> large swaths of the southern Ontario
community newspaper market and dared the Competition Bureau to do something
about it.<br />
<br />
Postmedia, 98 per cent owned by U.S.
hedge funds despite supposed limits on foreign ownership of Canadian
newspapers, <a href="http://www.postmedia.com/wp-content/uploads/2017/11/Postmedia-Announces-Community-Newspapers-Transaction-with-Torstar.pdf" target="_blank">pointed out</a> the deal was “not subject to the merger notification provisions of the
Competition Act and no regulatory clearance is required to close the
transaction.”<br />
<br />
That is technically correct given the dollar value of the deal (although no
money actually changed hands), but it doesn’t mean the Competition Bureau can’t
review matters after the fact, which it <a href="http://www.canadalandshow.com/competition-bureau-to-look-at-postmedia-torstar-deal/" target="_blank">promisedto do</a> when pressed by reporters.<br />
<br />
It could even roll the deal back, but don’t hold your breath, because
Postmedia and Torstar have the precedent of regulatory inaction on their side.<br />
<br />
The same thing, after all, has been going on for years mostly unnoticed in
B.C., well out of the national media glare. The two largest provincial chains,
Black Press (no relation to Conrad Black) and Glacier Media, have been buying,
selling and trading titles since 2010 and then often closing them to create
more lucrative local monopolies.<br />
<br />
The Competition Bureau has not lifted a finger to stop them.<br />
<br />
By my <a href="https://www.academia.edu/34282698/Death_by_natural_causes_or_premeditated_murder_B.C._chains_eliminate_competition_by_buying_trading_and_closing_newspapers" target="_blank">count</a>,
these two chains exchanged 33 community newspapers over a four-year period and
immediately or eventually closed 24 of them, or a competitor in the same
market.<br />
<br />
The latest casualty came last month when Glacier Media <a href="https://www.straight.com/news/1007436/westender-newspaper-will-close-after-68-years-business-vancouver" target="_blank">closed</a>
the Westender, a Vancouver weekly it acquired from Black Press as part of a
six-newspaper trade in 2013.<br />
<br />
Glacier already owned the twice-weekly Vancouver Courier, which is Canada’s
largest community newspaper, and the weekly Business in Vancouver.
A 14-newspaper trade between the chains the following year has since seen 10 of
them closed or merged.<br />
<br />
Of the 14 paid circulation dailies that have been lost in Canada
this decade — the latest being the <a href="http://www.cbc.ca/news/canada/saskatoon/moose-jaw-times-herald-final-thank-you-and-goodbye-1.4438945" target="_blank">Moose Jaw Times-Herald</a> last month — nine were published in B.C. by Black Press
(six) or Glacier Media (three).<br />
<br />
<aside class="ad-box ad-box--bigbox" data-dev-object-descrip="01-molecules/blocks/ad-box" data-dev-status="IN-PROGRESS">
</aside>As a result of these dealings, Black Press now owns every newspaper on Vancouver
Island, which has a size and population similar to New
Brunswick, except for Glacier Media’s daily Victoria
Times Colonist. Glacier similarly now controls the community newspaper market in Vancouver’s
booming eastern suburbs.<br /> </section><section class="messaging-block messaging-block--ask" data-dev-object-descrip="01-molecules/blocks/messaging-block--ask" data-dev-status="IN-PROGRESS">You might think that newspapers are dying and should be allowed to do these
kinds of competition-killing deals in order to survive.<br />
<br />
My <a href="http://www.marcedge.com/NRJEdge.pdf">research</a> suggests
otherwise.<br />
<br />
I studied the annual reports of all publicly traded newspaper companies in Canada
and the United States
from 2006 to 2013 for my 2014 book <i><a href="http://marcedge.com/Greatly_Exaggerated_5e.pdf" target="_blank">Greatly Exaggerated: The Myth of the Death of Newspapers</a></i> and found that not one recorded an
annual loss on an operating basis during that time, despite an historic
downturn in advertising revenues.<br />
<br />
Postmedia had operating <a href="http://www.postmedia.com/wp-content/uploads/2017/11/FINAL-17-749-Postmedia-Network-Canada-Corp-2017-Annual-Report-8.5x11-FULL-V13.pdf" target="_blank">earnings</a>
of $54.6 million on revenues of $754 million in its 2017 fiscal year ended Aug.
31, for a profit margin of 7.2 per cent.<br />
<br />
Fully 60 per cent of its earnings, however, went to pay the interest on
Postmedia’s massive debt, most of which is held by its own hedge fund
overlords, which are skimming their take right off the top in a nifty piece of
financial engineering.<br />
<br />
Torstar’s community newspaper division, Metroland, <a href="https://www.torstar.com/images/file/2017/Q3/Q3.pdf" target="_blank">reported</a> earnings
of $21.2 million on revenue of $272 million in the first nine months of 2017
for a profit margin of 7.8 per cent.<br />
<br />
Its flagship daily the Toronto Star, however, suffered a loss of $2 million
over the same period. Torstar’s deal with Postmedia may help to subsidize the
Star’s losses, but only by short-changing readers of its closed community
newspapers.<br />
<br />
A succession of media inquiries over the past half century — the 1970 Senate
report on mass media, the 1981 Royal Commission on Newspapers report and the
2006 Senate report on news media — urged measures to slow Canada’s
ever-increasing levels of media ownership concentration. All were ignored,
however, and we are now left to deal with the <a href="https://www.policyalternatives.ca/publications/monitor/can-canada%E2%80%99s-media-be-fixed" target="_blank">consequences</a>.<br />
<br />
The Liberal government ordered hearings into media and local communities in
2016 after Postmedia merged the newsrooms of its duplicate dailies in four of Canada’s
six largest cities.<br />
<br />
It had <a href="http://j-source.ca/article/postmedias-promises-prove-practically-worthless/" target="_blank">promised</a>
to maintain separate newsrooms before it got Competition Bureau approval for
its 2014 takeover of the Sun Media chain.<br />
<br />
The hearings, chaired by B.C. MP Hedy Fry, resulted in a <a href="http://www.ourcommons.ca/Content/Committee/421/CHPC/Reports/RP9045583/chpcrp06/chpcrp06-e.pdf" target="_blank">report</a>
in June calling for the Competition Bureau to be given more power to stop news
media mergers and takeovers, as well as other measures to boost local
journalism.<br />
<br />
So far its recommendations have also been ignored.<br />
<br />
The Trudeau government’s continued fiddling while the country’s news media
disappear will soon constitute negligence of the highest order. <br />
</section></aside></aside>Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-5726039077567245462017-12-12T10:35:00.002-08:002017-12-28T09:11:25.658-08:00A letter to the Toronto Star (unpublished)<!--[if gte mso 9]><xml>
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</xml><![endif]-->Re: <a href="https://www.thestar.com/opinion/contributors/2017/12/04/closing-tax-loophole-needed-to-save-local-media.html" target="_blank">Closing tax loophole needed to save local media</a>, Dec. 4<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Ian Morrison’s review of the tax measures designed to stem
the flow of advertising dollars to U.S.
media was conveniently incomplete. Section 19 of the Income Tax Act disallowed as
a deductible business expense the cost of advertising in foreign-owned publications to
protect magazines in the 1960s because U.S.
titles like Time were publishing Canadian editions. <a href="http://www.cjc-online.ca/index.php/journal/article/view/747/653" target="_blank">Bill C-58</a> similarly shielded
television in 1976 because American stations close to the border were selling
ads in Canada. That
set off a trade dispute in which the U.S.
disallowed as a business expense the cost of attending conventions in Canada.
More than 100 were cancelled the following year as a result. A ceasefire in this cross-border
business war was only negotiated with the 1988 Free Trade Agreement. This might
prove a cautionary tale about the perils of scheming to redistribute
cross-border commerce, especially in the current era of “America First.”</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Marc Edge</div>
<div class="MsoNormal">
University of Malta</div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-68778118289521352022017-11-28T13:23:00.000-08:002017-12-04T04:11:12.408-08:00Newspaper closures show need for media reform<i>An edited version of the following was published on <a href="https://thetyee.ca/Mediacheck/2017/11/27/Postmedia-Torstar-Media-Monopolies/" target="_blank">The Tyee</a>.</i><br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Postmedia Network’s recent trade with Torstar of 41 community
newspapers – with 36 of them<b> </b><a href="http://j-source.ca/article/torstar-postmedia-swapped-41-newspapers-closing/" target="_blank">reportedly to be closed,</a><b> </b>throwing 290 out of work – has prompted much Eastern media outrage. That’s
because it went down in Ontario,
which is the centre of the Canadian media universe. The same sorts of community
newspaper trades and closures have been going on for years in BC almost
unnoticed nationally, resulting in <a href="https://www.academia.edu/34282698/Death_by_natural_causes_or_premeditated_murder_B.C._chains_eliminate_competition_by_buying_trading_and_closing_newspapers" target="_blank">dozens of lucrative local monopolies </a>for Black Press and Glacier Media.</div>
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<b><br /></b></div>
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Postmedia’s observation that its trade with Torstar is “<a href="http://www.postmedia.com/wp-content/uploads/2017/11/Postmedia-Announces-Community-Newspapers-Transaction-with-Torstar.pdf" target="_blank">not subject to the merger notification </a>provisions of the Competition Act and no regulatory clearance is required to
close the transaction” points up the weakness in federal oversight of media
takeovers, which is practically nil. But since when is such brazenly
anti-competitive behaviour not subject to regulatory review? Maybe not in
advance, but surely it can be reviewed. Buying and then closing your
competition used to be illegal. Postmedia, which is 98 percent owned by U.S.
hedge funds, may have finally overplayed its hand in exploiting Canadian
regulatory laxity and then bragging about it.</div>
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<br /></div>
<div class="MsoNormal">
And while they aren’t as lucrative as they used to be,
Postmedia and Torstar’s community newspaper arm Metroland Media Group are
hardly losing money. MMG <a href="https://www.torstar.com/images/file/2017/Q3/Q3.pdf" target="_blank">recorded earnings</a><b> </b>before
interest, taxes, depreciation and amortization (EBITDA) for the first nine
months of 2017 of $21.3 million on revenues of $272 million, for a profit
margin of 7.8 percent. Postmedia had <a href="http://www.postmedia.com/wp-content/uploads/2017/11/FINAL-17-749-Postmedia-Network-Canada-Corp-2017-Annual-Report-8.5x11-FULL-V13.pdf" target="_blank">operating earnings</a><b>
</b>for its fiscal year ended August 31 of $12.35 million on revenues of $178.8
million, for a profit margin of 6.9 percent. The earnings of both companies
have undeniably fallen recently in step with plunging print advertising revenues,
however, and both companies have been forced to take drastic measures to boost
their bottom lines. Monopoly is indisputably more profitable than competition,
but will such anti-competitive measures – which greatly diminish local news
provisions, to the great detriment of democracy – finally push Ottawa
too far?</div>
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<br /></div>
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The closures and layoffs point up the urgent need for media
ownership reform in Canada.
Changes to the Competition Act to review mergers and takeovers of media outlets
on non-economic grounds were called for by a 2006 Senate report on news media.
That call was renewed in June by a Parliamentary committee on media and local
communities chaired by Vancouver Centre MP Hedy Fry, which held hearings for 16
months and issued a <a href="https://www.ourcommons.ca/DocumentViewer/en/42-1/CHPC/report-6" target="_blank">report </a>urging measures to ease the ongoing crisis in
Canadian journalism. Those also included boosting digital media, which are
struggling to fill the growing gap in news coverage, by making charitable donations
to non-profit news media tax deductible, as they are under Section 501(c)(3) of
the U.S. tax code. This has buoyed investigative journalism south of the border
by startups such as Pro Publica and the online-only Texas Tribune, along with
increased local news coverage by websites like MinnPost and Voice of San Diego. </div>
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<br /></div>
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Instead of these measures, however, news coverage of the Fry
committee report focused on a “Netflix tax” it supposedly recommended to help
boost Canadian journalism, which Prime Minister Justin Trudeau immediately
distanced himself from under questioning by reporters. The report recommended<a href="https://thetyee.ca/Mediacheck/2017/09/01/Netflix-Tax-Misnomer-Smear-Great-Idea/" target="_blank"> nothing of the kind,</a><b> </b>however. It instead suggested extending the 5 percent levy on cable and
satellite TV revenues, which helps to fund Canadian content, to the rich
profits the monopoly cablecos rake in on internet service provision. They make
about a 45 percent return on those revenues, which has helped them to quietly buy
up all of the major private TV networks in Canada
over the past decade. (Bell owns CTV,
Rogers owns the City network, and
Shaw owns the Global Television Network.)</div>
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<br /></div>
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Public perceptions were also not aided by the almost
immediate bid by the newspaper industry for a bailout of $275 million a year,
which Heritage Minister Mélanie Joly <a href="http://policyoptions.irpp.org/magazines/october-2017/jolys-right-decision-wrong-reasoning-on-canadian-news-media/" target="_blank">slapped down</a> in September. Lost in these
kerfuffles, however, have been the Fry committee’s suggestions for both slowing
media ownership consolidation and fostering Canadian digital journalism.
Changes to the Competition Act to better deal with media mergers are long
overdue, having been called for by two federal inquiries going back more than a
decade. And if the Liberal government wants to help grow digital media in Canada,
leveling the playing field with U.S.
media by helping to fund non-profit startups with charitable donations should
be another priority. </div>
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If nothing is done soon, the Fry report will almost
certainly join its predecessors in history’s dustbin. In addition to the 2006
Senate report on news media, those also include the 1970 Senate report on mass
media that proposed review of media mergers and takeovers, the 1981 report of
the Royal Commission on Newspapers that called for limits on chain ownership of
newspapers, and the 2003 Lincoln parliamentary report on broadcasting policy that
questioned convergence, which proceeded to <a href="https://www.policyalternatives.ca/publications/monitor/can-canada%E2%80%99s-media-be-fixed" target="_blank">decimate Canadian media</a>.<b> </b>Had the warnings of any of these inquiries been heeded, we likely wouldn’t
be in the media mess we face today. This is likely our last best chance to
finally act on media ownership reform.</div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-27567160160047977382017-10-15T08:12:00.002-07:002017-12-12T14:11:35.171-08:00Newspaper bailout rightly rejected, but for wrong reasons<!--[if gte mso 9]><xml>
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</xml><![endif]--><i>A poorly edited version of the following was published on the
website of </i><a href="http://policyoptions.irpp.org/magazines/october-2017/jolys-right-decision-wrong-reasoning-on-canadian-news-media/">Policy
Options</a>. <i>Note how my meaning was changed at the end of the first paragraph. This passage was altered post-publication without my knowledge after the apparent intervention of Edward Greenspon. I have protested the inaccuracy of her rewrite to the editor, who has refused to change it.</i><br />
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Edward Greenspon isn’t giving up on a bailout for Canadian
newspapers. “It is a good thing more thinking time has been allowed around the
policy framework,” <a href="http://policyoptions.irpp.org/magazines/october-2017/unfinished-business-for-canadian-journalism/" target="_blank">he wrote </a>in response to Ottawa’s
recent rejection of a proposal for giving $275 million in annual assistance to
the country’s troubled dailies. (Unfinished business for Canadian journalism,
Policy Options, Oct. 2) Greenspon somehow sees in <a href="https://www.canada.ca/en/canadian-heritage/campaigns/creative-canada/framework.html" target="_blank">background documents</a> filed with the policy pronouncement a door left open just a crack
for the ailing newspaper business. That means more work for his think tank, the
Public Policy Forum, which has been pushing a bailout since Hedy Fry’s
committee on Media and Local Communities released its report calling for
government action in June. </div>
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<br /></div>
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Greenspon laid the groundwork for a bailout in the PPF’s
report <i>The Shattered Mirror</i>, which was released in <strike>February </strike>late January and paid for
mostly by the Heritage Ministry, with a half dozen major corporations also
contributing. It so exaggerated the plight of newspapers, however, that it
brought <a href="http://thenewswedeserve.blogspot.com.mt/2017/02/the-shattered-mirror-just-broke-into.html" target="_blank">howls of derision</a> from Canadian media economists, myself included. He quickly
switched hats and began officially working on a bailout in conjunction with
News Media Canada, an industry group formed by the recent merger of the
Canadian Newspaper Association and the Canadian Community Newspaper Association.
Community newspapers already get assistance, as do magazines, from the Canadian
Periodical Fund, which doles out $75 million annually. </div>
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Greenspon’s proposal was simple, but expensive – extend CPF
assistance to dailies and boost the fund by $275 million a year. That fell flat
with the federal government, no doubt due in part to the fact that Postmedia
Network, by far the country’s largest newspaper chain, is 98 percent owned by U.S.
hedge funds. They are bleeding it dry by siphoning off most of Postmedia’s
annual earnings as payments on the company’s massive debt, the majority of
which the hedge funds also hold. This arrangement was allowed to stand by the
Harper government despite a supposed limit of 25 percent on foreign ownership in
this culturally sensitive industry. It then looked the other way in 2014 as
Postmedia took over Sun Media, the country’s second-largest chain, which gave
it 21 of the 25 largest Canadian dailies, including eight of the nine largest
in the three westernmost provinces. Soon after that deal got Competition Bureau
approval, and despite promises not to, Postmedia merged the newsrooms of
duplicate dailies it thus owned in Vancouver,
Calgary, Edmonton,
and Ottawa. It shamelessly pushed
the Conservatives for re-election in 2015, ordering its editors to endorse
Harper and running full-page, front page ads warning that voting Liberal or NDP
would “cost” Canadians. It even spiked an election day column by the National
Post’s Andrew Coyne because it endorsed a party other than the Conservatives.
Then it turns around and sticks its hand out to the newly-elected Liberal
government, asking for a bailout? Puh-lease.</div>
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<br /></div>
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Heritage Minister Melanie Joly made the right decision but
for the wrong reason in her nixing of assistance for Canada’s
dailies. “Our approach will not be to bail out industry models that are no
longer viable,” she said in setting out her vision for the government’s
relationship with Canadian media. “Rather, we will focus our efforts on
supporting innovation, experimentation and transition to digital.” Ironically, and
contrary to widespread misconception, newspapers remain viable, as I chronicled
in my 2014 book <i>Greatly Exaggerated: The Myth of the Death of Newspapers </i>(Vancouver:
New Star Books). Despite an historic downturn in advertising revenues as a
result of the Great Recession and a sharp pivot to cheaper digital advertising,
no publicly-traded newspaper company in the U.S. or Canada (ie. the ones for
which earnings reports are available) lost money on an operating basis between
2006 and 2013. Postmedia made $82 million in its most recent fiscal year, but $72
million of that went on debt payments to the hedge funds. The result has been
massive cuts to news coverage, which fledgling digital media have been unable to
make up for because few, notably subscription-based outlets such as
allnovascotia.com, have figured out how to make money online. </div>
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<br /></div>
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Greenspon, whose Shattered Mirror report was largely silent
on the sticking points of ownership concentration and foreign ownership,
protests that denying daily newspapers a spot at the media trough is wrong. “Excluding
the major originators of the country’s news, including local news, from a
scheme based on original editorial content would make no sense.” He has a new
idea, however, which smacks of a Hail Mary pass on behalf of Canada’s
dailies whose bailout ambitions he is quarterbacking. But it’s not that crazy
an idea. If the government is queasy about bailing out foreign hedge funds, he
writes, “there would be less static if, as part of a future support package,
these enterprises agreed to become (officially) nonprofits.” The notion of
converting legacy media to non-profit status has been bruited by some, such as <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674659759" target="_blank">French economist Julia Cagé</a>, in order to free them from the money-making
imperative that has run them into the ground. “In the case of newspaper chains,”
writes Greenspon, “each individual newspaper could be sold to owners based in
the local communities.” </div>
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<br /></div>
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Now we’re talking. Instead of cutting back on
journalism to feed their owning vulture funds, the country’s largest dailies
would be legally obligated to reinvest any profits in reporting. The advantage
to the government would be that the money to pay the vultures to flock off
would come not from the public purse but instead from new, hopefully more
civic-minded local owners. The only remaining matter would seem to be price.
How much would it cost us to pay off the hedge funds and be rid of their malign
neglect? The devil, as always, will be in the details.</div>
Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-22442840959357474772017-09-01T12:02:00.001-07:002017-12-03T11:13:06.963-08:00The “Netflix Tax” and other brilliant cableco propaganda<!--[if gte mso 9]><xml>
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</xml><![endif]--><i>The following was published in the <a href="https://www.policyalternatives.ca/publications/monitor/monitor-septemberoctober-2017" target="_blank">September/October issue</a> of the Canadian Centre for Policy Alternatives
magazine</i> The Monitor <i>and <a href="https://thetyee.ca/Mediacheck/2017/09/01/Netflix-Tax-Misnomer-Smear-Great-Idea/" target="_blank">reprinted </a>in The Tyee.</i><br />
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No sooner had Liberal MP Hedy
Fry’s parliamentary heritage committee handed down its report on Canada’s
news media crisis in June (after 16 months of hearings in Ottawa)
than the newspaper industry bellied up to the trough and put in for a bailout worth
$275 million a year. The timing was poor, as it appeared the other shoe had dropped
a bit too quickly. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
When it comes to money grabs, however,
the press proved bumbling amateurs compared with Canada’s
electronic media. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
Titled <i>Disruption: Change
and Churning in </i><i>Canada</i><i>’s
Media Landscape</i>, the <a href="https://www.ourcommons.ca/DocumentViewer/en/42-1/CHPC/report-6" target="_blank">Fry report</a> made many sensible recommendations. Some are
long overdue, like changes to our charitable giving laws that would allow tax-deductible
donations to fund journalism, as they can in the U.S.
and elsewhere. Other recommendations repeat pleas made by previous inquiries, such
as for a diversity test to prevent market dominance by any media owner, and changes
to the Competition Act that would treat news media takeovers differently than
those in other industries. The <a href="https://sencanada.ca/content/sen/committee/391/tran/rep/repfinjun06vol1-e.htm#_Toc138058315" target="_blank">same measures</a> were suggested in 2006 by a Senate
committee on news media, but they were ignored by a newly installed Harper
government that looked the other way for a decade as the country’s media instead
consolidated into unprecedented power centres.</div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj__RKKsJRYdq_IMzimSCW03lCF-5vOZxwFGXQyL4H2oWIzc-jbIF7vh_ltAyBOb4GOtIUn_jN3vo4CnzzyJ3yeoo0FzUZ0Yk_eRLPuA0Wu0ZOsz2xYvTleJDIKRYyPAXxvECrgcxTfgkyR/s1600/cable+profits+2016.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="496" data-original-width="880" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj__RKKsJRYdq_IMzimSCW03lCF-5vOZxwFGXQyL4H2oWIzc-jbIF7vh_ltAyBOb4GOtIUn_jN3vo4CnzzyJ3yeoo0FzUZ0Yk_eRLPuA0Wu0ZOsz2xYvTleJDIKRYyPAXxvECrgcxTfgkyR/s400/cable+profits+2016.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Internet Service Provision (ISP) profit margins, 2012-15</td></tr>
</tbody></table>
<div style="text-align: left;">
</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
Our largest newspaper chain
(Postmedia) was taken over on Harper’s watch by U.S. hedge funds, which now own
98% of the company—despite a supposed 25% limit on foreign ownership in this
culturally sensitive industry. Postmedia in turn took over Sun Media, our
second-largest newspaper chain, giving it 15 of the country’s 21 largest
dailies, including eight of the nine largest in Western Canada.
</div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
CEO Paul Godfrey <a href="http://www.j-source.ca/article/postmedia%E2%80%99s-promises-prove-practically-worthless" target="_blank">promised </a>to
preserve competition in cities where Postmedia thus owned both dailies and the
Competition Bureau signed off on the deal in 2015. The double-cross came last
year, when Postmedia merged the newsrooms of its duplicate dailies in Vancouver,
Edmonton, Calgary
and Ottawa, prompting Fry’s
inquiry. (See “Can Canada’s Media Be Fixed?” in the July-August 2016 <i>Monitor</i>.)
</div>
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The Fry report left vague any
process for subsidizing news media in its first of 20 recommendations, urging
only that the heritage minister “explore the existing structures to create a
new funding model that is platform agnostic and would support Canadian
journalistic content.” Within hours, however, the newspaper industry weighed in
with a detailed—and self-serving—proposal that was hardly agnostic with respect
to platforms. </div>
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The industry suggested the
<a href="https://www.canada.ca/en/canadian-heritage/services/funding/periodical-fund.html" target="_blank">Canadian Periodical Fund</a>, which currently subsidizes magazines and non-daily
newspapers to the tune of $75 million a year, offered a suitable model. News
Media Canada,
an industry group created by a recent merger between Newspapers Canada and the
Canadian Community Newspaper Association, proposed <a href="https://nmc-mic.ca/wp-content/uploads/2017/06/Canadian-Journalism-Fund-FINAL-20170616.pdf" target="_blank">extending the CPF</a> to daily
newspapers. It asked the government to simply underwrite 35% of their editorial
expenses, but to not give such assistance to regulated broadcasters, who
already benefit from the CRTC’s largesse, or to digital media like upstart blogs.
</div>
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“No one wants to fund personal
rants or political agendas,” <a href="https://www.winnipegfreepress.com/opinion/analysis/newspapers-at-the-bottom-fighting-an-uphill-battle-430492373.html" target="_blank">argued Bob Cox</a>, publisher of the independent <i>Winnipeg
Free Press</i>, who heads News Media Canada (despite Postmedia’s dominance of
the industry). Connecting the dots in all of this, we find some unsettling
connections.</div>
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A draft of News Media Canada’s proposal that was circulated
to groups for endorsement came on letterhead of the Public Policy Forum, but
the final version made no mention of involvement by the think-tank. Headed by
former Globe and Mail editor Edward Greenspon, the PPF was paid $200,000 by the
Heritage ministry in 2016 to research Canada’s
media malaise. </div>
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Greenspon’s report <a href="https://shatteredmirror.ca/" target="_blank"><i>The Shattered Mirror</i></a>, handed down early this year, took up with vigour the
newspaper industry’s escalating beef against Facebook and Google, which circulate
news online and dominate the digital ad market. But it so exaggerated the
plight of newspapers and the threat of the foreign internet giants that
Carleton University media economist <a href="https://dwmw.wordpress.com/2017/02/09/shattered-mirror-stunted-vision-and-a-squandered-opportunities/" target="_blank">Dwayne Winseck</a> accused Greenspon and his scholarly
research team of “goosing the numbers” to make their <a href="http://thenewswedeserve.blogspot.ca/2017/02/the-shattered-mirror-just-broke-into.html" target="_blank">overstated case</a>. The PPF’s
media projects may have been separate and unconnected, but the optics are nonetheless
poor.</div>
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The Harper decade also saw the
consolidation of even more worrying power centres in Canada’s
electronic media. The Fry report’s most contentious suggestion was for where
the money to fund flagging Canadian journalism should come from, and the
country’s media seemingly circled the wagons on this one. </div>
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The report proposed a levy on internet
service providers (ISPs), which was immediately framed as a <a href="https://thetyee.ca/Mediacheck/2017/06/16/How-Will-Canada-Save-Its-Media/" target="_blank">“Netflix tax”</a> by some
journalists. Reporters who had received leaked copies of the Fry report grilled
Prime Minister Justin Trudeau on the proposal almost before the ink was dry. He
<a href="https://www.thestar.com/news/canada/2017/06/15/trudeau-rejects-call-for-5-tax-on-broadband-internet-services.html" target="_blank">disowned </a>any such idea, saying “we’re not raising taxes on the middle class.” </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
What the report really suggested,
however, was extending to internet service provision the 5% levy that cablecos
already pay on their television revenues to fund Canadian broadcast content. It
makes sense, after all, that those who are cashing in fastest on the digital
revolution should help fix the mess the internet has made of media. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
The CRTC’s latest <a href="http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2016/cmr.htm" target="_blank">Communications Monitoring Report</a> shows the cabelcos make profit margins on their unregulated ISP
rates in the range of 45%. So rich have they grown, first through lucrative
cable TV monopolies, then with broadband internet access, that they have all bought
TV networks. (CTV is owned by Bell,
Global by Shaw, and CITY by Rogers.)
That gives the vertically integrated content/carrier TV giants tremendous power
over national perceptions. </div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
If they say Fry is angling for
a new tax on Netflix-watching Canadians, who will believe her report in fact urged
a levy to claw back excess profits from the corpulent cabelcos?</div>
<i><span style="font-family: "times new roman"; font-size: 12.0pt;">Marc Edge teaches media and communication at University </span><span style="font-family: "times new roman"; font-size: 12.0pt;">Canada</span><span style="font-family: "times new roman"; font-size: 12.0pt;"> West and the </span><span style="font-family: "times new roman"; font-size: 12.0pt;">University</span><span style="font-family: "times new roman"; font-size: 12.0pt;"> of </span><span style="font-family: "times new roman"; font-size: 12.0pt;">Malta</span><span style="font-family: "times new roman"; font-size: 12.0pt;">. His latest book is </span></i><a href="https://www.amazon.ca/News-We-Deserve-Marc-Edge/dp/1554201217/" target="_blank">The News We Deserve: The Transformation of Canada’s Media</a>. <i>(Vancouver: New Star Books, 2016).</i>Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-17901208487279236892017-03-18T00:21:00.002-07:002017-03-18T07:27:19.161-07:00This is fake news about the news. Sad!<!--[if gte mso 9]><xml>
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Dear Editor & Publisher,</div>
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Your article <a href="http://www.editorandpublisher.com/feature/the-canadian-newspaper-industry-is-getting-a-new-jolt-of-life/" target="_blank">“The Canadian Newspaper Industry is Getting a New Jolt of Life”</a> (March 6) was well written by H.G. Watson, but its presentation on your
pages was misleading in several ways, starting with the headline. After
reciting the litany of woes that have beset the industry over the past decade or so, Ms. Watson mentioned a few digital initiatives that are attempting to help
fill the growing news gap in Canada.
These hardly qualify as the “jolt of life” somehow seen by your headline
writer. The accompanying graphic was even more misleading, claiming that 171
local news outlets have closed in Canada
since 2008. This does not jibe with data gathered scrupulously by Newspapers
Canada, which actually show an increase over the past five years. It does, however, fit in well with the rampant myth-making I found in
researching my 2014 book <i>Greatly Exaggerated: The Myth of the Death of Newspapers.</i> (<a href="http://marcedge.com/Greatly_Exaggerated_5e.pdf" target="_blank">PDF</a> | <a href="http://www.marcedge.com/GEreviews.htm" target="_blank">reviews</a>)</div>
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As mentioned in your article, the Canadian newspaper industry
suffered less severely during the Great Recession than in the U.S.
That was because the economy north of the border did not decline as steeply due to more
sensible banking regulations. Only one daily was
closed, but
it was immediately reincarnated as a local version of the free
commuter tabloid <i>Metro</i>. By my count, eight daily newspapers have been closed in
Canada since 2010
(seven others have moved to non-daily publication), but the vast majority of
the closures have occurred under questionable circumstances that warrant
federal investigation. The largest newspaper closed was the <i>Guelph Mercury</i>, which
ranked about 50th in circulation among Canada’s
then 90-odd paid dailies. The others were among Canada’s
smallest. Six were closed and three were rendered non-dailies by
two chains in the far western province
of British Columbia that have been <a href="http://globalnews.ca/news/2488301/here-are-all-the-newspapers-in-b-c-that-have-shut-down-this-decade/" target="_blank">buying, selling, and even trading newspapers</a> back and forth since 2010, then often closing them to eliminate competition. By my
count, Black Press and Glacier Media have closed 19 of the newspapers they have
exchanged, including non-dailies. More than half of the 15 newspapers the
chains traded in <a href="http://www.straight.com/news/791601/glacier-and-black-press-newspaper-deal-reduces-competition-lower-mainland-and-fraser-valley" target="_blank">one 2014 deal</a> were subsequently shuttered, creating numerous local monopolies. The federal <a href="https://thetyee.ca/Mediacheck/2016/01/23/Postmedia-Crisis-Competition-Bureau/" target="_blank">Competition Bureau</a> seems not to have noticed. The chains have claimed that some of the closed
titles were unprofitable, but financial statements filed by Glacier Media,
which is publicly traded, show that it recorded a profit margin for the first
nine months of 2016 <a href="http://www.glaciermedia.ca/sites/default/files/Glacier%20Media%20Q3%20Sept%202016%20FS.pdf#8" target="_blank">in excess of 30 percent</a>. Black Press is privately owned and is thus not required to disclose its
finances, but it is partly owned by publicly-traded Torstar Corp., whose annual
reports show that between 2011 and 2015 Black Press recorded earnings ranging from $15 million to $28 million, peaking in 2013. As for non-daily
newspapers, according to <a href="http://newspaperscanada.ca/about-newspapers/circulation/community-newspaper-snapshot/" target="_blank">Newspapers Canada data</a>,
there were 1,060 in Canada
last year, or 18 more than in 2011. </div>
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As I show in <i>Greatly Exaggerated</i>, no publicly-traded
newspaper company in North America suffered an annual loss on an operating
basis between 2006 and 2013, a period which included the greatest-ever decline
in newspaper advertising revenues, a stupefying drop of about half in the U.S.
and a quarter in Canada. Most newspaper companies emerged from the recession
making double-digit profit margins. Some barely dipped below 20 percent return
on revenue. Even the dozen or so chains that declared bankruptcy during
this period were profitable, some enviably so. Their problem was the enormous
debt they had taken on in making acquisitions, which could not be serviced with
their reduced revenues. Their newspapers were profitable. The debt-laden chains
were not. </div>
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Hayley Watson poignantly asks in her article “What the hell
happened to the Canadian newspaper industry?” The answer is simple – unhindered
corporate financial engineering and inexcusable federal regulatory failure. My
2016 book <i>The News We Deserve: The Transformation of Canada’s Media Landscape</i> (<a href="http://marcedge.com/tnwd_introduction.pdf" target="_blank">PDF</a> | <a href="http://www.marcedge.com/tnwdreviews.htm" target="_blank">reviews</a>), chronicles how Canada’s largest
newspaper company, Canwest Publications, was taken over following its 2009
bankruptcy by U.S. hedge funds despite a supposed limit on foreign ownership of
25 percent. The hedge funds bought up a large portion of Canwest’s massive debt
at pennies on the dollar, then used part of it in making a so-called “credit
bid” that won the company at auction. The real stroke of financial engineering
genius came when the hedge funds kept the rest of this high-interest debt on
the company’s books, meaning that the renamed Postmedia Network had to pay them
first every month. As a result, of the $82 million in operating earnings
Postmedia recorded in its <a href="http://www.postmedia.com/wp-content/uploads/2016/11/2016-Annual-Report-FINAL.pdf#19" target="_blank">most recent fiscal year</a> (on revenues of $877 million, for a profit margin of 9.3 percent), it was
forced to make $72 million in payments on debt bizarrely held mostly by its foreign
owners. The result has been non-stop cost cutting to service this debt as
Postmedia revenues fall.<br />
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But wait, it gets worse. The hedge funds doubled down in
2014, buying 175 of the 178 dailies owned by Canada’s
second-largest newspaper chain, Sun Media. That gave it both dailies in three
more cities – Ottawa, Calgary
and Edmonton – in addition to Vancouver,
where it already owned both. It promised it wouldn’t merge the newsrooms in
those cities and the acquisition <a href="http://www.cbc.ca/news/canada/ottawa/postmedia-cuts-ottawa-sun-follow-1.3411579" target="_blank">was approved</a> by the Competition Bureau. By <a href="http://cjms.fims.uwo.ca/issues/14-01/edge.pdf" target="_blank">my count</a>, that gave Postmedia 37.6 percent
of paid daily circulation nationwide, and 75.4 percent in the three westernmost
provinces, where it owns eight of the nine largest dailies. Despite its
promises, in early 2016 Postmedia merged the newsrooms of its dual dailies in
Ottawa, Edmonton, Calgary, and even Vancouver, where its corporate progenitor promised the Competition Bureau’s predecessor more than a half century ago
that would never happen.<br />
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That’s when I decided to try and do something about this
instead of simply researching and writing about it, as I have for the past 20
years. I presented some of the above facts to Dr. Hedy Fry, who is the
longest-serving Member of Parliament in the federal Liberal government that was
elected in late 2015 following almost a decade of Conservative rule. Hearings
were convened in Ottawa by a Heritage ministry committee on Media and Local Communities several
weeks later and have been ongoing for <a href="http://www.parl.gc.ca/Committees/en/CHPC/StudyActivity?studyActivityId=8800976" target="_blank">more than a year</a>. A report by a <a href="https://shatteredmirror.ca/" target="_blank">think tank</a> was commissioned, but it ignored the problems of ownership concentration and foreign ownership, instead laying most of the blame for Canada's local news disaster on the U.S. online giants Facebook and Google, which it suggested taxing to subsidize shrinking news outlets. It similarly <a href="http://greatlyexagerrated.blogspot.com.mt/2017/02/shattered-mirror-more-like-funhouse.html" target="_blank">promoted the newspaper death myth</a> and was accused of <a href="https://dwmw.wordpress.com/2017/02/09/shattered-mirror-stunted-vision-and-a-squandered-opportunities/" target="_blank">"goosing the numbers"</a> in doing so. The committee's recommendations to alleviate the ever-worsening journalism crisis
in Canada are expected by spring.<br />
<br />
A real jolt of life is badly needed for Canada’s
decimated news media. It will hopefully come soon. In the meantime, can we please stick to the facts about what is undeniably a crisis and paint a picture that better conforms to reality?</div>
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Marc Edge, Ph.D.</div>
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Associate Professor</div>
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Department of Media and Communication</div>
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University of Malta</div>
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<![endif]-->Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0tag:blogger.com,1999:blog-4688994951199189162.post-13036043162551661672017-02-10T05:50:00.001-08:002018-01-04T23:50:12.430-08:00The Shattered Mirror just broke into a million piecesCriticism is piling up of the Public Policy Forum’s
controversial new report, <a href="https://shatteredmirror.ca/" target="_blank">The Shattered Mirror.</a> The
first round was of the knee jerk variety, which is what the daily press
specializes in. A second round of analysis is now under way by academics, who
are by nature more contemplative and less reactive. I was a bit hard on the
report, which was authored by former Globe and Mail editor Edward Greenspon, in
an entry posted earlier this week on my old blog, Greatly Exaggerated, calling it “<a href="http://greatlyexagerrated.blogspot.com.mt/2017/02/shattered-mirror-more-like-funhouse.html" target="_blank"></a><a href="http://greatlyexagerrated.blogspot.com.mt/2017/02/shattered-mirror-more-like-funhouse.html" target="_blank">more like a funhouse mirror</a>.”
My 2014 book <i>Greatly Exaggerated: The Myth of the Death of Newspapers</i>
produced reams of data to show that newspapers in Canada and the U.S. were
still making healthy profit margins. (They still are.) The Shattered Mirror nonetheless
goes to great lengths to perpetuate the myth that newspapers are “bleeding red
ink.” (As do <a href="http://ipolitics.ca/2017/01/04/bleeding-red-ink-the-future-of-canadian-media/" target="_blank">others</a>.)
<br />
<br />
My new book, <i>The News We Deserve: The Transformation of Canada’s Media
Landscape</i>, to which this blog is dedicated, looks at exactly what has brought our news
media to near banana republic status. I mainly blame our absurdly high levels of
media ownership concentration, which the federal Competition Bureau has failed
to halt or even challenge, and majority ownership of <st1:country-region><st1:place>Canada</st1:place></st1:country-region>’s
largest newspaper company by <st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
hedge funds in contravention of our foreign ownership limits, which the
erstwhile Harper government chose not to enforce. The Greenspon report dismisses
concentration as a problem, fails to even mention foreign ownership, and gives
the Competition Bureau a pass.<br />
<br />
<div style="margin: 0px;">
Now Carleton University media economist Dwayne Winseck has
weighed in with a scathing but lengthy analysis on his blog <a href="https://dwmw.wordpress.com/2017/02/09/shattered-mirror-stunted-vision-and-a-squandered-opportunities/" target="_blank">Mediamorphis</a>,
calling the report “badly flawed” because it “cherry-picks evidence and gooses
the numbers” to make its case. This, of course, is what think tanks like the
Fraser Institute do – start with predetermined policy conclusions and muster enough
evidence to support them while ignoring evidence that doesn’t. Chief among The Shattered
Mirror’s crimes, according to Winseck, is exaggerating the online bogeyman.</div>
<div style="margin: 0px;">
</div>
<blockquote class="tr_bq">
There is . . . an acute sense of threat inflation that hangs
about it. The extent to which Google, Facebook, Silicon Valley and “the
Internet” are made the villains of the piece is both symptomatic of how the
report tries to harness such threats to preordained policy ends and a framing
that undermines the report’s credibility.</blockquote>
Not only does The Shattered Mirror dodge the issue of media ownership
concentration, notes Winseck, it also overlooks the impact of the 2008-09 financial
crisis, which brought a sharp drop in advertising from which our news media have
yet to recover “and likely won’t.” Besides, he adds, “advertising is no longer
the centre of the media economy, and [is] receding ever further from that role
by the day, so hinging a policy rescue on recovering so-called lost advertising
is out of step with reality and likely to fail.”<br />
<div style="margin: 0px;">
</div>
<blockquote class="tr_bq">
As the bottom on advertising revenue falls out that source
of subsidy will have to be replaced by another if we really are concerned about
getting the news we deserve – trying to wrestle money out of Google and
Facebook (the report’s central policy proposal) won’t cut it. </blockquote>
Winseck, who closely tracks media industries through his Canadian
Media Concentration Research Project, is critical of the PPF report’s focus on the “fake news” fad and finds it generally alarmist. “The language
about ‘vampire economics’ is overwrought,” writes Winseck. “Such things give a
tinge of moral panic to the report, and taints the analysis and policy
proposals.” Data presented in the report to paint old media as declining and
even failing is highly misleading, according to Winseck. “Its fixation on
advertising revenue, for instance, assumes that it has always been an integral
part of the natural journalistic order of things. It has not.” A drop in
conventional television revenues noted in the report is “misleading,” according
to Winseck, in light of the lush profits being raked in by the broadcasting
behemoths overall, such as Bell’s “eye-popping” 40 percent return on revenue. <br />
<div style="margin: 0px;">
</div>
<blockquote class="tr_bq">
<st1:city><st1:place>Bell</st1:place></st1:city> is the biggest,
vertically-integrated TV operator in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>
by far, accounting for roughly 30% of <i>all </i>TV revenues and 28% of total
revenue across the network media economy. Ignoring conditions at a company with
this clout across the media economy is negligent, but also part of a tendency
in this report to selectively invoke a small part of the picture to fill in a
portrait of catastrophe of a larger kind. . . . The report is chock-a-block
full of such examples, which lends to the impression that the report’s authors
are goosing the numbers.</blockquote>
Likewise the report’s claims about collapsing newspaper
circulation and journalism job losses. Its claim that between 12,000 and
14,000 journalism jobs have been lost since the 1990s relies on headlines and
union data that “do a great job chronicling jobs lost but a poor one at keeping
track of those gained.” Statistics <st1:country-region><st1:place>Canada</st1:place></st1:country-region>
data “depicts a wholly different picture,” showing that the number of full-time
journalists in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>
actually increased from 10,000 in 1987 to 11,631 in 2015. “Once again
consistent with a pattern, the authors ignore this data completely.” My take on
this is that there is no doubt mainstream media have suffered massive job
losses due to cutbacks brought by plunging revenues, but digital media have
proliferated, albeit with less well-paying and secure positions. And who knows
how many of those new “journalists” actually pump out sponsored content a/k/a
native advertising that is designed to look like news but is actually paid for by advertisers.<br />
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Circulation trends for daily newspapers, according to
Winseck’s data going back to 1971, are similarly “not the catastrophe that The
Shattered Mirror makes them out to be.” He has the same problem I have with the
plummeting graph of newspaper sales per household (left), which the PPF report predicts
will fall from 18 in 2015 to only two by 2025. “By <i>this </i>measure, the
relentless decline and seemingly inevitable outcome look really, really bad –
catastrophic even,” writes Winseck. But sales per household are increasingly
less relevant as the number of households soars because people are increasingly
choosing to live alone. Winseck performs an extensive analysis of historical
newspaper circulation data to show that the Public Policy Forum has grossly
exaggerated the decline of newspapers. The report, according to Winseck, “has
selectively chosen <i>a</i> measure that paints the <i>worst-case</i>
scenario.” This type of intellectual dishonesty might be common practice in the
world of journalism from which Greenspon comes, but it won’t get past a
scrupulous scholar like Winseck. My own research has found that newspapers have
deliberately cut back on circulation in order to save on expenses because they
actually lose money on every copy they sell.</div>
<br />
<a name='more'></a>Of course, they make it all back and more in advertising, which has undeniably
been in freefall, declining 40 percent from 2008-15. “This is bad,” admits
Winseck, but nowhere near as bad as portrayed in the PPF report. “Thus far,
none of the measures reviewed leads to a ‘good news story’, but each of them in
their own way change the magnitude, timing and potential causes of the problem.”
Blaming the misfortunes of newspapers on the Internet as the report does is
misguided, he claims. “There is <i>no</i> downward spike in the fortunes of
the press on <i>any of these measures</i> that coincides with when the
internet takes off.”<br />
<blockquote class="tr_bq">
Given this, the internet – and Facebook and Google – cannot be the villain
of the piece that <i>The Shattered Mirror </i>(and so many lobbying the
government from the “creator” and “cultural policy” groups) makes it out to be.
In fact, this is not news. While such claims are common, that they are wide of
the mark is well known.</blockquote>
Media economists such as himself and Robert Picard have been pointing this
out for years, notes Winseck, but the facts don’t seem to have seeped through
to <st1:city><st1:place>Ottawa</st1:place></st1:city>. “That neither
circulation nor revenue dives downward with the arrival of the internet cuts to
the heart of <i>the </i>central claim in <i>The Shattered Mirror</i>. Yet,
like so much of the evidence that does not fit its ‘sky-is-falling-because-foreign-internet-giants-ate-Canadian-news-media’s-lunch’
rhetoric, this evidence doesn’t make the cut. If all of this is correct, we
must also change our diagnosis and policy proposals accordingly.”<br />
<blockquote class="tr_bq">
Not only does newspaper revenue not spike downwards with the advent of the
internet, the onset of economic woes for advertising supported media do not
coincide with the time frames that the Public Policy Forum report identifies,
typically 2005 or 2006 for newspapers and ‘recently’ for TV. The upshot of its
misdiagnosis is to effectively carry on with the ill-fated case its authors <i>want</i>
to make while avoiding another possible – and I believe far <i>better </i>—
explanation for the woes they describe: the impact of the financial crisis in
2008 and economic instability that has followed ever since.</blockquote>
It was the recession, not the Internet, that diminished the
newspaper industry and caused television to shift from advertising to a
subscription model, stresses Winseck. “None of this is a mystery, except to
those who work the policy apparatus here in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>,
and there is <i>no </i>mention of it in <i>The Shattered Mirror</i><i><span style="font-style: normal; margin: 0px;">.” </span></i><span style="margin: 0px;"> </span>This fact has also been lost on “the myriad of
groups vying to shape the outcomes” of the Heritage ministry’s ongoing review
of the lush Cancon industry. “Beyond this cloistered community, however, the
fact that the fate of advertising-based media turns tightly on the state of the
economy – and indeed, is something of a canary in the coal shaft for it – is
reasonably well known and discussed by media economists from across the
political spectrum.”<br />
<div style="margin: 0px;">
</div>
<blockquote class="tr_bq">
In sum, it is a mistake to focus on a ‘silver bullet’
explanation of complex issues like the one before us. The fixation on the
negative impact of the internet and the two villains of the piece, i.e. Google
and Facebook, is misplaced. In short, advertising revenue has taken a nose dive
because the economy has been shattered not because Tyrannosaurus Digital Media
Rex Google and Facebook ate the news media’s lunch.</blockquote>
Winseck sees in Greenspon a “willful refusal”
to deal with media industry structures in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>,
which are “wholly ignored” in the report. “These examples are not innocent,” he
claims. “They are part of a process of ‘threat inflation’ with the aim of
buttressing the case for the policy recommendations on offer.” While
exaggerating some threats, the report downplays a major problem, according to
Winseck. “<i>The Shattered Mirror </i>also gives short shrift to the idea
that media concentration and the structure of the communication and media
industries might be a significant factor giving rise to the woes besetting the
news media.” By overplaying, as the report does, the threat posed by Google and
Facebook “the effect is to minimize the extent to which media concentration and
the uniquely high levels of vertical and diagonal integration between
telecoms-internet service providers and other key areas of the media,
especially television, have given rise to homegrown problems rather than the
debilitating ‘vampire economics’ imported from afar.”<br />
<blockquote class="tr_bq">
One must also look at trends over time, and in comparison to other parts of
the world. <i>The Shattered Mirror</i> report does nothing of the sort, and
so it paints a picture sloppily with a broad brush, declaring that media
concentration is not a problem when it feels fit to do so, but a worrying
concern where that suits its purposes, i.e. in the areas that Google and
Facebook dominate. Ultimately, there is no overarching sense of how everything
fits together, and so the image drawn is arbitrary, and wholly dependent on the
whims of the observer.</blockquote>
According to Winseck, “it is folly to willingly turn a blind
eye to high levels of media concentration and the peculiar structure of the
media industries in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>
. . . because the costs of bulking up have had devastating impacts.” The PPF
report “gives us a whiff of the costs in terms of journalistic and editorial
jobs lost, but nowhere does it connect the dots. Of course, having ruled these
issues “off-limits”, what should we expect?” That the PPF report “willingly
walked away from these issues,” adds Winseck, “is stunning, and naïve.”<br />
<div style="margin: 0px;">
</div>
<blockquote class="tr_bq">
In doing so, it walks away from an impressive body of
research from around the world that says that these issues are important,
extraordinarily complex, and foundational to understanding the emerging digital
media environment.</blockquote>
So how does everything fit together? Why would the PPF
report paint such a misleading picture of <st1:country-region><st1:place>Canada</st1:place></st1:country-region>’s
media industries? Why are some issues, such as media ownership concentration,
“off-limits?” It might have something to do with those lush profits mentioned
earlier. In addition to Bell’s whopping 40-percent profit margin, notes
Winseck, fellow media giants Shaw (42 percent), Rogers (38 percent), and
Quebecor (37 percent) are also raking in profits at about four times the rate in
other Canadian industries. “These observations are at odds with the story of
doom and gloom that permeates <i>The Shattered Mirror</i>.” <br />
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</div>
<br />
<div style="margin: 0px;">
The answer might lie in what the late Canadian media economist
Dallas Smythe and Tran Van Dinh of <st1:place><st1:placetype>Temple</st1:placetype> <st1:placetype>University</st1:placetype></st1:place>
identified as “the ideological orientation of the
researcher.” I have found in my research on Canadian media that the research
and policy agenda has been steered by some academics with an ideological
agenda, whose schools often then get a slice of the money that trades hands in
media takeovers. “All of us have our predispositions,” <a href="http://search.proquest.com/openview/ae4c22d50f03c1dc60158aef3a4801b0/1?pq-origsite=gscholar&cbl=1821303" target="_blank">noted</a> Smythe and Van
Dinh in 1983,
“either to criticize and try to change the existing political-economic order,
or to defend and strengthen it. The frequent pretense of scientific ‘neutrality’
on this score is a delusion.” Those who are prepared to defend Big Media get
jobs and research funding. Others don’t. It’s that simple. Winseck knows
this only too well, and in an attempt to convey that message he points to who
was behind the report.</div>
<blockquote class="tr_bq">
That the report refuses to engage with media concentration and the peculiar
structure of the media is not surprising given that many of those surrounding
its lead author, Edward Greenspon, in the development of this report have not
just sat back and taken arm chair academic views on these matters but have been
leading cheerleaders for the processes of consolidation in Canada that have got
us to where we are. </blockquote>
Winseck declines to identify the cheerleaders, instead urging readers to do
their own research. “The industrious reader need only consult the list of
acknowledgements to sort out who is who and draw their own conclusions. Given
all this, that media concentration wasn’t on the agenda is not surprising. It’s
still a pity, though, because the issues are serious.” Perhaps his discretion
is wise. After all, look at where my propensity to name names and point fingers
has gotten me. I am currently teaching at the <st1:place><st1:placetype>University</st1:placetype>
of <st1:placename>Malta</st1:placename></st1:place>, having for some reason
been unable to secure an appointment at any journalism school in my Home on <st1:place><st1:placename>Native</st1:placename>
<st1:placetype>Land</st1:placetype></st1:place> despite some absolutely stellar
credentials. I guess that means I have less to lose than Professor Winseck, so being
an industrious reader I’ll take it from here.<br />
<br />
Let’s look at that list of Acknowledgements. Following a
two-page Afterword in which Greenspon chronicles how journalism “allowed a shy
kid to find his voice,” starting at the Lloydminster Times, he thanks the “hundreds
of people” who provided input into his report. The four principal researchers were
Chris Dornan, Winseck’s colleague at Carleton, Taylor Owen at the <st1:place><st1:placetype>University</st1:placetype>
of <st1:placename>British Columbia</st1:placename></st1:place>, Colette Brin
at Université Laval, and Elizabeth Dubois at the <st1:place><st1:placetype>University</st1:placetype>
of <st1:placename>Ottawa</st1:placename></st1:place>. I recognized only half
of those names. Dornan is a former director of Carleton’s journalism school and
is now its graduate supervisor. He is a go-to guy when the news media need an
academic to comment on how media ownership concentration is nothing to worry
about. I took him to task in <i>Greatly Exaggerated</i> for <a href="http://www.macleans.ca/news/canada/experts-weigh-in-on-concentration-of-canadian-media-ownership/" target="_blank">downplaying</a> Postmedia’s
takeover of Sun Media in 2014. “Worrying that a smaller and smaller number of
companies own a larger number of newspapers is kind of beside the point,” he
told the Canadian Press,
“because the newspapers themselves have been eclipsed in their social,
political and economic prominence by the new digital concourses of
communication.”<br />
<br />
<div style="margin: 0px;">
</div>
<div style="margin: 0px;">
Brin
was associated with the erstwhile Canadian Media Research Consortium, which I
have savaged over the years for its work on behalf of media owners. Read about
that <a href="http://www.friends.ca/node/11179" target="_blank">here</a>.<span style="margin: 0px;"> </span>I did not recognize the name Taylor Owen, but then he just started as an
assistant professor at UBC’s j-school, which I have vivisected for a decade and
a half in protest of its corporate apologism. (Read the latest on that in <i>The
News We Deserve.</i> <a href="http://www.marcedge.com/jmce.pdf" target="_blank">This article</a> is from 2004.) Owen
is quoted throughout the report as an expert in online news. He has a <a href="http://taylorowen.com/" target="_blank">website</a>
with his latest writings on things like Virtual Reality. (This is journalism?)
Dubois is another assistant professor Internet expert fresh out of school,
albeit <st1:city><st1:place>Oxford</st1:place></st1:city>. Her contribution to
the report is unclear, as she is not quoted, but her <a href="https://arts.uottawa.ca/communication/en/people/dubois-elizabeth" target="_blank">research</a> apparently
revolves around “how technology may be leveraged to increase democratic
accountability and engagement.” </div>
<br />
<div style="margin: 0px;">
</div>
<div style="margin: 0px;">
Pollster Allan Gregg of Tragically Hip fame led the report’s
polling efforts, aided by Natalie Turvey, who is executive director of the
Canadian Journalism Foundation, and Chris Waddell, who is both a Carleton professor
and a CJF board member. The CJF, as I noted in my 2007 book <a href="http://www.marcedge.com/Asper_Nation_3W.pdf#136" target="_blank">Asper Nation</a>, was founded in 1990 by corporate executives who, according to the National
Post, felt that Canadian business was “getting a raw deal from a wildly pinko
media whose primary objective was to trash the corporate sector.” Its top
executives wrote letters supporting <st1:city><st1:place>Bell</st1:place></st1:city>’s
2000 takeover of CTV, and it was present at the CMRC’s conception, although the
Post’s conflict of interest revelations shamed it out of participating overtly in
its parenting.</div>
<div style="margin: 0px;">
</div>
<br />
<div style="margin: 0px;">
Some of those acknowledged in the report are journalists and
journalism educators who do good work, but others stick out like a sore thumb,
such as Jonathan Goodman,<span style="margin: 0px;"> </span>global managing partner<span style="margin: 0px;"> of the multinational strategy consulting firm </span>Monitor Deloitte,
and Peter Donolo, vice chairman of PR firm Hill+Knowlton. The latter company is perhaps
best known for faking the “<a href="http://www.prwatch.org/books/tsigfy10.html" target="_blank">babies ripped from incubators</a>” story that helped turn <st1:country-region><st1:place>U.S.</st1:place></st1:country-region>
public opinion in favor of invading <st1:country-region><st1:place>Kuwait</st1:place></st1:country-region>
in 1990. Ken Goldstein, president of <st1:city><st1:place>Winnipeg</st1:place></st1:city>’s
Communic@tions Management Inc., is listed as one of those having been “particularly
patient in helping us understand industry numbers.” In a <a href="http://greatlyexagerrated.blogspot.com.mt/2016/03/canadas-chief-media-apologist-sings.html" target="_blank">recent blog entry</a>, I labeled Goldstein “<st1:country-region><st1:place>Canada</st1:place></st1:country-region>’s
chief media apologist.”
His prediction that newspapers have only a few years left was given prominence
in The Shattered Mirror.</div>
<div style="margin: 0px;">
</div>
<br />
<div style="margin: 0px;">
In addition to $200,000 in government funding, the PPF
report received $70,000 in private funding. It came from the
journalism-oriented McConnell, Atkinson, and Max Bell foundations, as well as from
corporate donors CN, TD Bank, Ivanhoé Cambridge, and Clairvest Group. The 2016 PPF
report Does Serious Journalism Have a Future in <st1:country-region><st1:place>Canada</st1:place></st1:country-region>?,
by Madelaine Drohan of the Economist, on which The Shattered Mirror relied in
part, was researched and/or written during a fellowship funded by the Royal
Bank.</div>
<br />
<div style="margin: 0px;">
So there you have it – glass and blood all over the floor. Now
that you have some more background to the report and where it came from, you
can make up your own mind if Winseck is right about it. </div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Marc Edgehttp://www.blogger.com/profile/00510625002771364258noreply@blogger.com0