Newspapers owned by SaltWire Network Inc. in Halifax on March 12.Darren Calabrese/The Canadian Press
Louis Audet is the chairman of Cogeco Inc.
Since 2008, 40 daily newspapers, 400 community newspapers, 42 radio stations and 11 television stations have disappeared in Canada, according to a recent study by Toronto Metropolitan University and UBC.
That collapse has happened as advertising at domestic media outlets has plummeted, to the point where 70 per cent of Canadian ad expenditures are paid to foreign-owned digital media, a separate report by the media studies centre at Laval University shows.
The result is that in some of those places, communities no longer have the benefit of local media to reflect community identity and provide local coverage. Where they are still alive, news coverage has shrunk in quantity and quality as newsrooms were pared down to survive. The fight with foreign-owned digital media for revenue is being lost because of the winner-takes-all dynamic of the digital age. Canadian local media are inexorably pushed toward extinction.
Why does this matter? Why should we care?
Simply put, Canadian local media reflect our values, inform us with verified facts about the issues that matter to us and provide a place to discuss them. Local media are a necessary condition for a healthy democracy to flourish, and we risk losing it without taking effective action.
The amount of advertising spending diverted to foreign-owned digital media was $13.5-billion in 2022. Our government has enacted laws – the Online Streaming Act (C-11) and the Online News Act (C-18) – which require foreign companies to pay a share of their profits to Canadian media entities. Unsurprisingly, the move has met resistance from the biggest players. Local Canadian news has seen a 58-per-cent decline in engagement since Meta owner blocked links to Canadian-produced content on Facebook and its other social-media platforms.
Last month, the U.S. Trade Representative initiated a dispute settlement under the USMCA over the online legislation. What more evidence do we need to comprehend that attempting to coerce foreign actors will not work because Canada has no leverage?
At best, if successful, these laws would likely jointly contribute about $300-million to Canadian entities. That is a paltry 2.2 per cent of the $13.5-billion diverted to foreign-owned digital media. So, these laws, in addition to being contested, are woefully insufficient. They are so insignificant relatively speaking that Canadian local media will continue to disappear.
The Ontario government’s decision to mandate that a meaningful amount of government agency advertising spending be earmarked for Ontario publishers is a step in the right direction. Let us hope other provinces will follow suit and include local broadcasters as well. This is a welcome and necessary step, but in light of the total amount to be recovered, this gesture remains symbolic.
A different approach is urgently required.
There are solutions that cannot be legally challenged by foreign digital-media owners. Solutions that are fully under the control of the Canadian government. Numerous parties have been advocating this for a long time and their advice has gone unheeded.
In the 1960s, Parliament adopted Article 19 of the Income Tax Act. This article stipulated that when a Canadian advertiser uses non-Canadian media, the expenditure is not deductible for income tax purposes. This has helped radio, television, newspapers and magazines to flourish for decades despite the outsized resources of foreign-owned competitors.
But foreign digital media were not placed under the purview of Article 19 when they appeared. At first, that made little difference. Now it is decimating the Canadian local media ecosystem.
The solution is self-evident: Foreign-owned digital media should be brought under the authority of Article 19. Urgently. In fact, the damage is already so advanced that adding some form of tax credit is also necessary, but not sufficient on its own.
In August, 2018, a House standing committee concluded that bringing foreign digital media under Article 19 would be detrimental to small Canadian businesses. The naivety of this conclusion is appalling, given the stakes at hand, and has only served to punt the problem further down the road to the point of jeopardizing the livelihood of Canadian local media. Although smaller businesses in Canada rely on Canadian local media, they could, if necessary, be granted a modest general exemption threshold for foreign-owned media spending that would satisfy their needs.
What is needed now is political courage. This is not about creating privileges for a select few. If Parliament doesn’t act soon, it will have few, if any, outlets left to reach its constituents.
Is anyone listening? They are going, going and could soon be gone.