Peter Menzies: Proposed Online News Act Inserts the State Into the Newsrooms of the Nation

CommentaryMore than half a century ago Canada’s then-prime minister, Pierre Trudeau, famously declared that the state has no place in the bedrooms of the nation. Last week, the government of current Prime Minister Justin Trudeau very quietly inserted that same state into the newsrooms of the nation. The tool used is something called the Online News Act, which readers will also see referred to as Bill C-18. It was introduced April 5 by Heritage Minister Pablo Rodriguez, who in doing so declared it to be a step forward in the battle against “disinformation” in Canada. Well, good for him. Others see this as a move likely to further erode already plummeting levels of trust in legacy media. Here’s how this came about. Twenty years ago, newspapers were outrageously profitable organizations. The combined annual profits of Alberta’s four major dailies—Calgary Herald, Edmonton Journal, Calgary Sun, and Edmonton Sun—were close to $150 million. Then along came high-speed internet, social media, free classified platforms, and more. Realtors and auto dealers could advertise through their own websites and once-captive eyeballs went, well, everywhere else. The money went with them. To put matters in perspective, last year the nation’s largest newspaper company, Postmedia, amassed a mere $442 million in gross revenue from its 130 brands. That’s about what those four previously mentioned Alberta papers were bringing in 20 years ago. The Toronto Star and all its affiliate titles were sold for less money than the Calgary Herald used to make in a year. What didn’t go away, of course, were all the encumbrances of happier days—capital upkeep, collective bargaining agreements that no longer make sense, pension liabilities, and more. Thousands of jobs have been lost through annual layoffs while publishers tried to put on a brave face in front of their remaining advertisers. All may appear to have been lost for legacy media, but in the meantime, the internet made it possible for a plethora of innovators and entrepreneurs to start up original news platforms based on 21st-century realities. Meanwhile, advertising and profits went where our eyeballs shifted to: social media and search engines. Incapable of adapting to technological change, the legacy newspaper business did what a previous generation of publishers would have turned away from in disgust and began lobbying the government for a solution. First, they got almost $600 million in tax credits available to media organizations of which a government-appointed panel approved. Then, another fund of about $50 million over five years was set up to pay the salaries of reporters whose beats were given the nod by yet another panel. National Observer, the platform run by one of those panelists, got three salaries paid—one for a reporter assigned exclusively to cover federal  government activities in British Columbia. Not a great look. Then, last week, along came the Online News Act, something for which legacy media had campaigned relentlessly in recent years, some going so far as to turn their front pages into full-page campaign ads promoting the idea. The argument they made was that social media companies and search engines were unfairly profiting from the content that news companies posted—for free—on these web platforms. The economics supporting the argument are, to be generous, vague. But it is enough for the government to point to as a rationale for what to all intents and purposes is a bailout. Some call it a shakedown. The Online News Act forces tech platforms to negotiate “commercial” agreements with Canadian news organizations to “compensate” them for, near as I can tell, having built a better mousetrap. There are a lot of things wrong with Bill C-18, which not surprisingly won universal praise from the editorial boards of the nation’ leading newspapers even though I’m pretty sure few read it. In fact, I’m hoping they didn’t because I can’t imagine they would approve of the price they will have to pay. We will get into more of the details in the weeks to come, including how this puts those who, on principle, won’t take money offered or procured by government at a disadvantage to those who will. For now, here’s the quo that goes with the quid on Bill C-18. The commercial agreements have to be reached in a fashion that satisfies not just the two parties, which should be sufficient. But no, they also must satisfy the government, which has put the Canadian Radio-television and Telecommunications Commission (CRTC) and its nine cabinet-appointed members in charge of oversight. The legislation, as proposed by Rodriguez, insists that tech companies ensure that the money they pay to news organizations be spent on domestic news coverage only. First of all, if this is truly a “commercial” arrangement, what business is it of the government to tell news organizations how they spend the money? I mean, it’s their money, isn’t it? Maybe their priority is technological? Maybe it’s intern

Peter Menzies: Proposed Online News Act Inserts the State Into the Newsrooms of the Nation

Commentary

More than half a century ago Canada’s then-prime minister, Pierre Trudeau, famously declared that the state has no place in the bedrooms of the nation. Last week, the government of current Prime Minister Justin Trudeau very quietly inserted that same state into the newsrooms of the nation.

The tool used is something called the Online News Act, which readers will also see referred to as Bill C-18. It was introduced April 5 by Heritage Minister Pablo Rodriguez, who in doing so declared it to be a step forward in the battle against “disinformation” in Canada. Well, good for him. Others see this as a move likely to further erode already plummeting levels of trust in legacy media.

Here’s how this came about. Twenty years ago, newspapers were outrageously profitable organizations. The combined annual profits of Alberta’s four major dailies—Calgary Herald, Edmonton Journal, Calgary Sun, and Edmonton Sun—were close to $150 million. Then along came high-speed internet, social media, free classified platforms, and more. Realtors and auto dealers could advertise through their own websites and once-captive eyeballs went, well, everywhere else. The money went with them. To put matters in perspective, last year the nation’s largest newspaper company, Postmedia, amassed a mere $442 million in gross revenue from its 130 brands. That’s about what those four previously mentioned Alberta papers were bringing in 20 years ago. The Toronto Star and all its affiliate titles were sold for less money than the Calgary Herald used to make in a year.

What didn’t go away, of course, were all the encumbrances of happier days—capital upkeep, collective bargaining agreements that no longer make sense, pension liabilities, and more. Thousands of jobs have been lost through annual layoffs while publishers tried to put on a brave face in front of their remaining advertisers. All may appear to have been lost for legacy media, but in the meantime, the internet made it possible for a plethora of innovators and entrepreneurs to start up original news platforms based on 21st-century realities. Meanwhile, advertising and profits went where our eyeballs shifted to: social media and search engines.

Incapable of adapting to technological change, the legacy newspaper business did what a previous generation of publishers would have turned away from in disgust and began lobbying the government for a solution. First, they got almost $600 million in tax credits available to media organizations of which a government-appointed panel approved. Then, another fund of about $50 million over five years was set up to pay the salaries of reporters whose beats were given the nod by yet another panel. National Observer, the platform run by one of those panelists, got three salaries paid—one for a reporter assigned exclusively to cover federal  government activities in British Columbia. Not a great look. Then, last week, along came the Online News Act, something for which legacy media had campaigned relentlessly in recent years, some going so far as to turn their front pages into full-page campaign ads promoting the idea.

The argument they made was that social media companies and search engines were unfairly profiting from the content that news companies posted—for free—on these web platforms. The economics supporting the argument are, to be generous, vague. But it is enough for the government to point to as a rationale for what to all intents and purposes is a bailout. Some call it a shakedown. The Online News Act forces tech platforms to negotiate “commercial” agreements with Canadian news organizations to “compensate” them for, near as I can tell, having built a better mousetrap.

There are a lot of things wrong with Bill C-18, which not surprisingly won universal praise from the editorial boards of the nation’ leading newspapers even though I’m pretty sure few read it. In fact, I’m hoping they didn’t because I can’t imagine they would approve of the price they will have to pay. We will get into more of the details in the weeks to come, including how this puts those who, on principle, won’t take money offered or procured by government at a disadvantage to those who will. For now, here’s the quo that goes with the quid on Bill C-18.

The commercial agreements have to be reached in a fashion that satisfies not just the two parties, which should be sufficient. But no, they also must satisfy the government, which has put the Canadian Radio-television and Telecommunications Commission (CRTC) and its nine cabinet-appointed members in charge of oversight.

The legislation, as proposed by Rodriguez, insists that tech companies ensure that the money they pay to news organizations be spent on domestic news coverage only. First of all, if this is truly a “commercial” arrangement, what business is it of the government to tell news organizations how they spend the money? I mean, it’s their money, isn’t it? Maybe their priority is technological? Maybe it’s international news? Doesn’t matter. Going forward, Canadian news organizations will prioritize what Bill C-18 says are its priorities.

To make sure that happens, the CRTC is assigned the task of approving these agreements. This means, one assumes, that it has the power to disapprove of them and, I expect, indicate a preference for more money for this or that type of coverage. More diversity here, more underserved communities there, who knows? Despite Rodriguez’s promise of a “light touch,” there appears to be nothing in the act to assure that. Even more interesting is that it remains both unclear and unlikely that any of us in the public will ever be privy to these agreements.

What is obvious is that while the economics of technological change may have brought legacy publishers to their knees, Bill C-18 puts them on their bellies.

The state is very much in the soon-to-be-humiliated newsrooms of the nation. What a shame.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, an award winning journalist, and former vice-chair of the CRTC.