REALity Volume XXXV Issue No. 5 May 2016

Canada’s newspapers have had a miserable year. They have had to make cost-saving changes which have resulted in the loss of jobs for hundreds of their employees.  For example,

  • Montreal’s La Presse – For over one hundred years, this newspaper was the largest French-language daily in North America. It is no longer available in print form except on Saturday. The paper’s owners have moved the paper to digital format, leaving many of its journalists, graphic artists, photographers, etc., without employment;
  • Postmedia news has cut 90 jobs across the country. Postmedia purchased the Sun News in 2015, and has now merged the news rooms of its major newspapers with the Sun newsrooms in Vancouver, Calgary, Edmonton and Ottawa. For example, the Ottawa Citizen, Edmonton Journal, Calgary Herald and the Vancouver Sun now share a newsroom with Sun newspapers operating in these cities, although separate papers are still being published. The news is re-written according to the style of each outlet, so Postmedia claims that nothing has changed.

  Postmedia, which has 200 plus media outlets across the country, was purchased by way of funding by the New York based Golden Tree Asset Management, a hedge fund, which now controls   
  35% of Postmedia. Postmedia owes the hedge fund $672 million for financing Postmedia’s creation five years ago from the bankrupt Canwest empire owned by the Asper family, and for its
  purchase last year of its Sun Media expansion.  This debt must be paid or refinanced by July, 2018.  Another major investor in Postmedia is Canso Investment Canada, a private investment
  fund located in Richmond Hill, Ontario.  The latter would be first in line to take control of Postmedia in the event that restructuring becomes necessary down the road.

  It is significant, however, that Postmedia, which includes some of the biggest dailies in the country, is still making money. That is, although, the large city dailies are taking the biggest hit from
  the transformation to the information age, Postmedia’s many small mid-size and community newspapers continue to make a profit.  It is the enormous debt plus the approximate $60 million
  annual interest paid on the debt to the New York hedge fund that is hurting Postmedia so badly.

  • Torstar (Toronto Star and Metroland Media)Torstar is a Canadian media and publishing company based in Toronto. The company is primarily a publisher of daily and community papers, including its flagship and namesake, the Toronto Star. It recently announced that it was closing down its printing plant in Vaughan, Ontario, and will lay off about 300 employees as a result. It also recently laid off 13 people from its digital team.At the end of January, 2016, Torstar closed down the community newspaper, The Guelph Mercury, because it wasn’t making money. This resulted in 26 full-time and three part-time employees losing their jobs. The Guelph Mercury had been in existence for 150 years.

The Reason for the Problems of the Canadian Newspapers

Surprisingly, these problems are not being caused by people spending less time reading newspapers. In fact, the average time Canadians spend reading newspapers has stayed almost the same since 2000.  This amounts to around three hours per week.  About 70% of Canadians read newspapers on a regular basis. However, the public is also reading news on their laptops, cellphones and tablets.

The problem for newspapers is that the advertisers are abandoning the print media and moving their advertisements over to Google and Facebook, which does not generate as much revenue. This is because readers and advertisers do not want to pay as much for news on screen as they do for news on paper. Analysts expect print advertising revenue in Canada will continue to decline from $2.7 billion in 2008 to $1.7 billion by 2017 – a $1 billion dollar loss.  This is the real cause of the problems experienced by Canada’s newspapers.

Toronto Star’s Vicious Attack on Postmedia

The Toronto Star published several articles in the past few months, in which it has viciously attacked Postmedia, calling it a “cancer” on journalism, a “malignancy” and an “abomination”. One might think that the Toronto Star doesn’t like Postmedia! 

It is not just the financial competition that the Toronto Star abhors, it is also the fact that Postmedia has about 21 million Canadian readers across the country, which the Toronto Star can’t influence with its left-leaning slant on the news. For example, the Toronto Star attacked Postmedia for its alleged endorsement of Cons policies and Stephen Harper’s bid for re-election last October. This was hypocrisy on the part of the Toronto Star as it had slavishly supported Justin Trudeau for Prime Minister during the election campaign, and has, since the election, reported Trudeau and his government’s policies only in uncritical, rosy, positive terms.   Another major reason for the Toronto Star’s attack on Postmedia is that the Toronto Star is in dire financial difficulties itself and is on the brink of a financial meltdown.  Torstar is controlled by a voting trust held by seven families (descendants of the original owners).  Their shares have fallen since 2004 from $240 million to $20 million today. It is a question as to which newspaper chain will hit the wall first.

Is There a Solution to the Current Misery of Canada’s Newspapers?

Several solutions have been put forward to solve the problems of Canada’s newspapers. One solution is to have federal and provincial governments play a role in funding newspapers.  This recommendation should be marked as “dead on arrival”.  We certainly don’t need the government to interfere in the important undertaking of providing news to Canadians.  We already know the outcome of such a scenario.  It is far too likely that a newspaper funding scheme by governments would be influenced by the newspapers’ perspective.  That is, although claiming to be completely in support of press freedom, governments would be sure to target those newspapers that do not support their policies.  It would be difficult for a government to resist doing so.  All too often, we have witnessed governments’ financial favouritism towards projects with which they agree.

Another recommendation is that newspapers become charitable or non-profit trusts.   Two of the world’s most respected newspapers, namely, London’s Guardian and the Observer, are owned by non-profit trusts.  The Tampa Bay Times, owned by a non-profit journalism school, the Poynter Institute, tops its rival, the Tampa Tribune, in readership, and has won many Pulitzer prizes. 

The issue of freedom of the press is a serious one since it is a cornerstone of democracy. A solution to the problem facing Canadian newspapers must be found before they all hit the wall.