Commons panel struggles to finalize report on how to help ailing news industry

OTTAWA — A parliamentary committee studying Canada’s slumping media industry is struggling to finalize a long-awaited report that could, among other things, recommend Ottawa create a “digital fund” to provide temporary help to revenue-starved smaller newspapers, some of its members say.

The angst surfaced this week as one Canadian media giant reported much steeper losses than had been predicted only six months ago and while news aggregators, such as Facebook, continue to gobble up advertising revenues at a swift pace.

The heritage committee study of Canada’s fast-changing media landscape began more than a year ago and some of its members have voiced frustration over how long it has taken to formally provide the Liberal government with recommendations for helping the media industry as it copes with drastically declining advertising revenues.

One proposed recommendation would see the creation of a temporary, stop-gap fund to lend small community news services a hand in transitioning from print to online versions of their papers, said sources familiar with a draft version of the committee’s report.

But the committee is grappling over how to regulate such a fund, said the sources, speaking on condition of anonymity because they weren’t authorized to speak publicly about the report’s contents.

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Witnesses who appeared at hearings last year, including Postmedia and the Reuters Institute for the Study of Journalism, proposed the government implement payroll and digital production tax credits to support the hiring of journalists by community papers.

Others, such as Montreal-based Transcontinental, which last month announced the sale of 28 Atlantic newspapers and digital assets to the publisher of the Halifax Chronicle Herald, argued for more direct subsidies or tax credits for digital news operations.

Committee members met behind closed doors this week to put the finishing touches on their report and were expected to meet again next week before sending it out for translation, possibly before the May long weekend.

But as of Thursday, the 10-member panel had yet to reach consensus on details of some of the key recommendations expected to be included in their report.

Conservative MP and committee member Kevin Waugh acknowledged the media industry needs help. But a key concern for him and other committee members is ensuring that tax dollars — if any — earmarked for small newspapers don’t end up in the hands of large corporate owners rather than the intended recipients, he said.

“We have seen the big boys bleed these little newspapers,” said the former television broadcaster-turned-politician.

“A lot of them were making some money and all of a sudden that has gone to Toronto or wherever. (The money) has not stayed in local markets and that’s been an issue.”

Liberal MP Hedy Fry, who chairs the committee, said some understandable procedural issues have slowed preparation of the report. But other delays, such as a natural gas leak that shut down several blocks of downtown Ottawa this week, have also left her frustrated.

“Something always happens — we’ve all decided the media gods are mad at us for some reason,” Fry joked as she entered an in-camera meeting Thursday.

In an earlier interview, Fry suggested the report will likely touch on a broad range of issues raised during committee hearings, such as the role of news aggregators in the demise of traditional media, and the more recent phenomenon of so-called “fake news” that has infiltrated political campaign coverage, particularly in the United States.

“A lot of witnesses felt news needs to be something that is verifiable and accountable,” Fry said. “So the issue of news, its definition, and whether it is verifiable and accountable is a big issue for us.”

But a more immediate concern revolves around questions of what the government could, or should, do to prepare for what some analysts are predicting: the potential downfall of Canadian media giant Postmedia.

Lobbyists, including one union that represents newspaper workers, were in Ottawa this week meeting with heritage committee members and Liberal MPs, delivering a blunt message: get ready for a media earthquake.

“The government better not get caught flat-footed on Postmedia going under” was the warning issued by Unifor’s Howard Law.

Newspapers and other media outlets across the country have faced sharp declines in advertising revenues over the last decade. Even those that have fostered a strong online presence have been unable to convince advertisers to spend as much on digital ads as they used to pay for print versions.

Torstar CEO John Boynton said Wednesday he’ll be making “some fairly big decisions” soon in a bid to overcome his firm’s print revenue losses. The Toronto Star’s tablet platform has so far failed to live up to hopes of a rebound in revenues.

But Postmedia — owner of the National Post as well as 14 major daily newspapers, two free dailies, several online news portals, dozens of community papers and a range of specialty publications largely based in Ontario — isn’t just a victim of the print advertising exodus. It is also saddled with debt after borrowing significantly to grow itself into Canada’s largest newspaper publisher.

Despite concluding a significant restructuring of its debt last October, the company’s share value has declined sharply since and its circulation revenues are also down.

The impact of a Postmedia bankruptcy would be astronomical without government intervention, Law said he told MPs.

“Two-thirds of the (newspaper) titles west of the Ottawa River are Postmedia,” said Law. “So you’re talking about a 66 per cent reduction in journalism overnight,” unless other newspaper companies pick up the pieces.

Heritage Minister Melanie Joly has promised to unveil a plan later this year to help Canadian news outlets.

While she’s remained tight-lipped about what options the Liberals are considering, Joly suggested last week that media companies should find new business models on their own while the government acts as a “catalyst for change.”

“What the current disruptions require is a true redefinition of our business practices and models,” Joly told the annual Canadian Association of Journalists conference.

— Follow @tpedwell on Twitter

Terry Pedwell, The Canadian Press