Media slush fund won’t save government journalists from unemployment

Declining advertising revenue during the COVID-19 pandemic led to newspaper closures and the loss of 2,500 jobs. News Media Canada is currently discussing the possibility of extending and doubling the $595 million rebate.

Media slush fund won’t save government journalists from unemployment
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Even if the government media party extends and doubles their funding beyond next March, it is unlikely to result in a net job creation or be a worthwhile investment.

A Heritage Canada memo confirmed that taxpayer subsidies will not save money-losing news media, reported Blacklock’s Reporter.

“At least one third of Canadian journalism jobs have disappeared since 2010,” said the May 17 memo The Online News Act. “Between 2008 and February 1, 2023 a total of 470 local news operations closed in 335 communities across Canada.”

“Between the same period 210 new news outlets launched,” it continued. “The government supports journalism in several ways but supports alone cannot redress the structural decline of the current business model.”

In 2019, parliament approved a $595 million bailout fund for the media, with a decision on its renewal expected before March 31. 

According to News Media Canada, a newspaper lobby, an extension and doubling of the “temporary” annual rebate is in talks, reported Blacklock’s Reporter.

News Media Canada, who successfully lobbied Parliament for the media slush fund four years ago, has asked that rebates increase from $13,750 to $29,750 annually.

“The financial situation for most news publishers is extremely challenging,” Paul Deegan, CEO of News Media Canada, wrote the Commons finance committee. “It will remain so for many in the short to medium term.”

The rebate must increase to 35% on a higher pay calculation to a maximum $29,750, he wrote MPs.

As part of the negotiations to extend the rebates, Deegan said Parliament must reward ‘cabinet-favoured publishers’ with advertiser tax credits and “earmark 25 percent of the Government of Canada’s domestic advertising spend towards trusted news sources.”

According to the most recent data, federal advertising totalled $140.7 million a year. And of that total, only $6.5 million went to newspapers.  

According to Blacklock’s Reporter, a 25% quota would raise media advertising sixfold to $35.2 million a year.

Deegan reiterated in a May 30 testimony at the Senate transport and communications committee that publishers need the government.

“We have a market failure here,” he said. “We do need them.”

However, taxpayer-subsidized media has not created any net jobs since 2019, admits the heritage department. 

According to a 2021 briefing note Improving Federal Support For Journalism, the decline in advertising revenues during the COVID pandemic forced newspaper closures, costing more than 2,500 jobs. 

While subsidies created 342 jobs for journalists, those hires had their wages subsidized fully under a $50 million Local Journalism Initiative. 

Publishers have also asked the federal government to extend the Local Journalism rebate, reported Blacklock’s Reporter.

However, Bob Cox, then-chair of News Media Canada, testified in 2019 to the Commons finance committee, stating he considered the bailout fund “a transitional program” that provided media “temporary help.”

“The program itself is envisioned to be for five years and I felt that was an appropriate period of time for the transition because of course there will be news outlets, newspapers, that fail the transition, and you can’t give them forever,” said Cox. 

“We will have to save ourselves,” he added.

Other critics, including a former Toronto Star foreign editor, called the program “corrosive” and “ill-conceived.”

“Direct aid to people who report the news, that’s dangerous,” testified John Miller, professor emeritus at Ryerson University, at the 2019 hearings for the Senate finance committee. 

“This constitutes one of the gravest threats to freedom of the press that I have seen in this country,” he claimed.

“If I’m a reporter and I’m on to a story about some scandal in government and for various reasons it’s not there and I back off, and one of my readers finds out about that, how am I going to defend myself when the reader says, ‘Oh, that’s because you get money from government’?” asked Miller.

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