Trudeau government assessing a future without Canada’s two largest newspaper companies

Financialpost.com
Nov. 17, 2016
By Sean Craig

As the print media industry copes with mounting revenue declines, layoffs and quarterly losses, the Trudeau government is considering what the media landscape would look like without the country’s two largest newspaper companies.

Heritage Minister Melanie Joly’s office confirmed to the Financial Post that the Department of Canadian Heritage “regularly does industry-specific environmental scanning” that includes the hypothetical scenarios that Toronto-based Postmedia Network Canada Corp. and Torstar Corp. will cease operations.

“The way Canadians access content is changing with new platforms and technologies,” said a spokesperson for Joly. “The shifts that are happening as a result are significant. One of the objectives of our Canadian content consultations is to assess how to best support the production of news information as well as local content that is credible and reliable.”

Spokespeople for both Postmedia and Torstar declined to comment for this story.

The government is currently holding cross-country consultations with industry groups as part of a sweeping review of Canada’s $48 billion broadcasting, media and cultural industries, the results of which could have tremendous impacts on the struggling bottom lines of Postmedia and Torstar.

E-mails and documents obtained under the Access to Information Act show that bureaucrats at the Department of Heritage have been preparing assessments of markets that would lose significant media coverage if either company were to cease publishing.

Postmedia publishes the National Post, and is the only publisher of daily broadsheets in many of Canada’s largest cities, including Calgary, Edmonton, Vancouver and Ottawa. It also publishes the only English-language daily broadsheet in Montreal, in addition to dozens of community newspapers and tabloids.

Faced with a 13.7 per cent decline in revenue, and a 21.3 per cent decline in print advertising revenue, Postmedia reported a $99.4 million loss in the three months ending Aug. 31, significantly more than the $54.1 million in the same period the previous year. Last month the company, which employs approximately 4,000 staff, announced it intends to cut hundreds of positions by reducing its salary costs by 20 per cent.

Torstar publishes Canada’s largest daily circulation newspaper, the Toronto Star, alongside other broadsheets The Hamilton Spectator and the Waterloo Region Record, and more than 100 community papers.

Earlier this month Torstar reported an adjusted third-quarter loss that exceeded analyst expectations, as its operating revenue fell 12.6 per cent to $162.1 million and its print advertising revenues fell 16.1 per cent. The company has laid off more than 350 editorial and production staff in 2016.

Officials from both Postmedia and Torstar have testified before the House of Commons Standing Committee on Heritage in recent months. In both cases, the newspaper companies urged the federal government to consider policies that could assist their struggles as digital disruption continues to hammer their legacy businesses, and as they explore ways to monetize their content online.

“The erosion of print revenue has been dramatic,” Postmedia CEO Paul Godfrey told the committee in May. “The picture is ugly and it will get uglier.” Godfrey urged the government to ramp up federal spending on advertising in newspapers, and to provide tax incentives for companies that do the same.

John Honderich, chair of Torstar Corp., told the committee last month that “there is a crisis of declining good journalism across Canada and at this point we only see the situation getting worse.” Honderich criticized the publicly funded CBC for competing in the digital advertising market with competing media companies who don’t benefit from its generous public subsidy, and suggested the government look at the British public broadcaster, which is not allowed to compete with its domestic competitors for ad dollars.

The Heritage committee hearings and the Department of Heritage’s Canadian content consultations are part of a broader effort by the federal government to examine the state of the media in Canada. The Liberals have also contracted the independent Public Policy Forum to draft a report on the news industry that will include policy recommendations.