Canadian Heritage Committee on April 19th, 2016

[Alysia Lau]

We see generally right now that the obligations are for local programming, not local news. Regarding Omni, I think, we've mentioned the budget cuts. I know the CBC as well have decided to cut their late evening newscasts and their weekend newscasts in Ottawa. We consider Ottawa to be actually an urban market.

We believe one of the recommendations, moving forward, is to make sure that the conditions of licence are specific to local news, because that is what Canadians value. Local news still means a lot to them.

[The Chair, Liberal, Hedy Fry]

Thank you.

That's it, Mr. Van Loan. Thank you very much.

Now we're sharing time between Mr. Nantel and Ms. Sansoucy from the NDP.

Thank you.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

My question is for Mr. Chartier.

In our regions, we know how important local media are. They are often the only way of getting news about the region. As my colleague said, if you are 50 kilometres from a major centre, it is often like you are on another planet.

All the witnesses who appeared today spoke about the challenge of producing regional news. We also heard about the importance of raising the profile of professional journalists in our democracy. With regard to your request for support during this transitional period, I would like to hear how you contribute to community development, through both advertising and editorial content.

[Benoit Chartier]

Consider, for example, the Courrier de Saint-Hyacinthe, which has ten or so journalists in the field and which has been reporting on the city for 164 years.

In my opinion, a regional newspaper is quite simply a pillar of democracy. The rapid shift to digital advertising in the last 24 months, as Mr. Olivier said, is jeopardizing this role and threatening the strength of journalism in the region. Without strong regional journalism, everything is up in the air. As Mr. O'Reagan said, the ability to do investigative journalism and get to the bottom of issues can be diminished. We would not find out, for instance, that the mayor's friend owns a lot in the neighbourhood that has been re-zoned. Freedom of the press is part of the foundation of democracy, and that freedom must also exist in the regions. It must exist right across Canada, but especially in the regions.

Falling advertising revenues have left newspaper publishers in turmoil, in a downward spiral, which could soon lead to the closure of certain newspapers. When regional newspapers disappear, news coverage is greatly reduced. There is no reporting on local politicians, be they local MPs, MLAs, or the mayor. Facebook, Google and Yahoo will not provide this coverage since they are based in San Francisco and elsewhere in the world. They take advertising dollars out of the country.

The situation is critical, in my opinion. We must take a serious look at the challenge posed by digital advertising. We will probably need a lot of government help to support journalism and news coverage in the regions.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you very much to all of our witnesses.

Thank you, Ms. Lau and Mr. White.

This is cause for great concern. I would like to highlight to my fellow committee members that, when Mr. Olivier says he will have to cut products, he means he will have no choice but to shut down newspapers in the regions.

[François Olivier]

Yes, we are a large corporation. I can tell you that we have a number of newspapers that are operating at a loss. I am not talking about tens or hundreds of dollars, but millions.

The corporation has a social role to play as a civic partner, but it also has to answer to shareholders. I am the head of a public corporation. When the numbers don't add up anymore, we have to address it. We try to group titles together. For example, a newspaper that served just one municipality will have to serve two or three at the same time.

We are in a transition. It's true that we do very well selling print advertising because we have been doing it for 40 years and because we have improved our practices. We need time to adapt to the Internet. Consumers want our product. Citizens and readers demand local content. They call saying they want more. The demand is there, but we need time to transition to a digital company, and I think we can get there. People are following us, in the print edition, on the website, on tablets, and on mobile apps. We are inventing a new business, which poses certain challenges. Whereas in the past, we managed news organizations, we must now in a sense become technology-based organizations.

We have two requests. First, we need temporary assistance for content production; second, we need financial incentives to invest in technology, to create new jobs in this area, and to purchase software applications.

Could some of our expenses be reimbursed as tax credits? We are trying to adapt in order to keep local news alive. We are not asking for a single dollar that we are not prepared to invest ourselves.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Essentially, you operate in Saskatchewan and in eastern Canada. You have a very wide reach since you own nearly 100% of regional weeklies. You print and distribute them, and you maintain your editorial independence.

[Benoit Chartier]

Yes. We are also the publishers.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Is the situation similar—I think so, but I'll ask all the same—in the other provinces?

[François Olivier]

Yes.

[Benoit Chartier]

Yes, it is identical.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I would like to consider your recommendations.

You are correct in saying, on page 8, that it is incumbent on Canadian Heritage to support you through financial incentives that would cover up to 50% of production and content costs. You are making a request to Innovation, Science and Economic Development Canada, which is your R and D support in general. Then you make a request that we have often heard, namely, that all government departments and agencies be encouraged to use your advertising services.

That is a very good idea, especially since it would have a leverage effect. If an ad is created by a professional graphic artist within a department, it enhances the content and the appearance. The local fruit store is happy to advertise its pineapples, which are not expensive, because it increases the critical mass of advertising.

We have to wonder what our communities would be like without the community bulletin board that these newspapers provide. People would have to put up an ad at the IKEA store, 300 kilometres from the town where a softball game will be held, in support of a youth association. Your media are extremely important, and I think our examination of the issues is very sound.

Thank you for describing the very similar situation in Quebec and in eastern Canada.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Nantel.

We now go to a second round, but we can only take a three-minute round instead of a five-minute round this time because of time constraints.

Mr. Breton, for the last seven-minute round.

[Pierre Breton, Liberal, Shefford, QC]

Is it seven minutes or three minutes?

[The Chair, Liberal, Hedy Fry]

You have seven minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you very much, Madam Chair.

Many thanks to the witnesses for their time today. It's very appreciated.

I would like to continue in the same vein as my colleagues, Mr. Nantel and Ms. Sansoucy.

In my riding in the Granby area, three newspapers you represent, the Granby Express, the Journal de Chambly, and La Pensée de Bagot, reach nearly 100% of the population. Since my riding is regional, I am also very concerned about the future of these newspapers. I consider them and your media to be an important resource for our community.

I completely agree with what my colleagues said. Who will cover the Rougemont municipal council if your newspapers disappear? Who will report on the winter festival or other regional activities? No one will. In addition to being an important resource, your media really bring people together. Your role is relevant and it makes sense. When I hear of potential closures, I am concerned, not only for myself of course, but for everyone in my riding.

You have presented your requests and suggested measures to us. As we have discussed each one, I know they are on page 8.

At first glance, I support your ideas in general, but I would like to hear more about each of your proposals.

[François Olivier]

The government could support us in two ways.

It could create programs that would give us tax credits or grants that would help us deal with the challenges we are facing.

During this transition period, our challenge is to maintain the quantity and quality of information. To achieve this, we would need temporary assistance from Canadian Heritage to support content. If we were to spend $150,000 to pay people to create content in a given region, we could receive assistance in the form of tax credits or grants to support content, which is at the very heart of our business.

By the same token, we can't always come to you for help. We must become self-sufficient. We can only achieve that by deploying our content on digital platforms. Moving from a print organization to a digital one is a tremendous challenge. We have to make investments. In the last four years, Transcontinental has invested $40 million to transition to digital platforms. Our sales are $24 million and it will take a long time before we see a return on our investment. We will ultimately need help. The second area of assistance relates to innovation and science.

If we invest, could the government give us a tax credit for our investments? Transcontinental is seen as too large of a company to receive any kind of assistance under federal and provincial programs. Could someone look into this? Ministers, premiers, mayors, and MPs are calling me to say that we don't have the right to close newspapers. That is our second request. This is one way the government could support us.

Here is another way the government could help.

The government advertises a great deal in our print and digital media. The 50% loss in revenues is also due to the fact that the federal, Quebec, and municipal governments are advertising less. Someone would have to tell all the departments that, given the importance of local content in Canada, assistance will be provided over the next three or four years. These Canadian news organizations have innovative print and digital products. Could the advertising purchasers in all departments make a slight effort to be more strategic in order to support these organizations through government advertising dollars? That would be another way of helping us. Right now, there is no strategy at all.

[Benoit Chartier]

The government also spends a lot on advertising on Facebook and Google. For my part, I am not comfortable with this. These two American companies earn billions of dollars, but that money does nothing for Canada. These are good platforms, to be sure, but our media reach everyone. It is as simple as that.

The government should also encourage the 33 newspapers and the 20 independent publishers that I represent. We don't have the power or strength of Transcontinental, which has its own distribution, printing, and packaging network. It can be active on the various platforms. For our part, we focus on the weekly edition. Our revenues are from our advertisers but the revenues are dwindling. The government could, of course, help us a great deal, as Mr. Olivier suggested, especially as regards spending on advertising. The government could establish a strong strategy to help local media since they are part of the riding's ecosystem. That is the long and short of it.

We write about you and cover your press conferences. The newspaper La Pensée de Bagot covers Valcourt, Roxton, and all the other localities in the region. We are on the ground every week, but Facebook and Google would never provide that coverage.

[François Olivier]

I would like to make a last point, which relates more to the provincial level.

Provinces have different formulas requiring newspaper publishers to pay recycling fees. We are absolutely ready to do that. Some provinces adopted those formulas in 2010 and 2011. Newspaper circulation in those provinces has dropped by 40%, but we are still paying according to the same formula, as though all those newspapers were in the recycling bins.

We have been telling the provinces for years that it makes no sense to keep paying the price we paid in 2011 considering the 40% drop in newspapers going into the bins. We get a positive response, but we are still paying. For Transcontinental, the cost is $1.4 million per year. We are not saying that we don't want to pay, but could the formula be changed to better reflect the current situation? Those are our four requests.

Once again, we are asking for temporary assistance only if investments are made.

[The Chair, Liberal, Hedy Fry]

Thanks very much.

Now we go to the second round, which is three minutes.

Mr. Waugh from the Conservatives.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Recycling fees, that was a big story today actually, so, yes, you've hit the point. You're selling less paper, so you should be paying less. I would agree with you there.

[François Olivier]

Yes.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

I'm just going to pick up on Mr. O'Regan. It's interesting that I flew home last Friday, and on the second page of every national paper they were blowing their horn about how many eyeballs are reading per week in the newspaper industry. I feel your pain. If you ever lose the advertising on the flyers, which you are going to—you must know that the flyer industry in papers is going down, and eventually it is going to go digital—then you're done. Those flyers are billions of dollars in this country from coast to coast. I see the storm clouds; you must see them. The flyers are what make your newspaper.

[François Olivier]

The flyers, in a sense, support the distribution of all these local papers that incur a lot less cost because they are distributed with the flyers. Actually, since 2009 a lot of people have been predicting, like you, the disappearance of printed flyers. We just ran a study lately that shows they are still very popular. Only 9% of Canadians look at the deals only digitally—39% of Canadians look just on paper—which means that 91% look at the paper through digital.

I won't talk a lot about that. I think we still have a lot of years with the printed flyer, but eventually, yes, something will happen. When that happens, if that happens, it's going to create more pressure on community papers because right now they're piggybacking on the 20 or 25 retailers that are paying for the distribution network, and they jumped on that. If these guys disappear, it's going to create more pressure on the community paper business model.