Thank you, Madam Chair, and honourable committee members. Good morning.
First of all, I would like to thank you for inviting Postmedia to participate in today's session. The heritage committee has quite rightly identified the very real need to explore Canadians' access to news and information. This is a critical time for Canadian news media, and the need for action is quite urgent.
My name is Paul Godfrey, and I'm the president and CEO of Postmedia. With me today is Doug Lamb, Postmedia's executive vice-president and CFO, and Gerry Nott, senior vice-president of content, Postmedia, and senior vice-president of the National Post.
Postmedia's daily newspapers have in total the highest weekly print readership in Canada, reaching 8.3 million Canadians each week. Our digital properties have 12.8 million average monthly unique visitors, including websites that rank number one in Canada in the newspaper category. We have more than 180 print titles in all, reaching cities and communities including Melfort and Gananoque, Saskatoon and Ottawa.
I'm here today to tell you that everything you read or have seen or have clicked on for telling the doom and gloom in the news media industry does not provide the picture. In fact, it is actually quite understated.
To be clear, it is not nearly as glamorous to own a newspaper as it was back in the heyday. Just last week another Canadian media company reported troubling results. As I'm sure the committee well knows, threats from all comers—new digital operations, massive international players, and shifting advertising budgets—have wrought havoc on the cornerstone of our democracy, a free and independent press. The myriad of challenges to the traditional news media business model is well documented. We all know that a free press isn't really free.
However, without community newspapers covering hyper-local stories, they simply would go unexplored, unchallenged, and unreported. Larger Canadian cities are made up of neighbourhoods that are represented in our urban daily newspapers, too. Even at a time when people everywhere have more access to news than ever and when anyone can take an active part in breaking the news around them through social media, it is still the role of professional journalists to delve deeper, to gain access, and to ask questions on behalf of us all.
Joelle Kovach of the Peterborough Examiner won an Ontario newspaper award for coverage of municipal affairs, including the debate around a city bureaucrat owning property being re-zoned for commercial use. Stories like this would simply cease to exist without people reporting from city halls and town offices across the country in places such as Nipawin and Portage la Prairie, Lloydminster and Kincardine. Even the city of Montreal has local stories that probably don't trend on social media. Nevertheless, Linda Gyulai from the Montreal Gazette waged a seven-year access to information battle to expose corruption in Montreal's municipal government. Her work has been nominated for a National Newspaper Award.
Last week, as wildfires burned, Fort McMurray Today was delivered to the citizens in evacuation centres. When those evacuation centres were evacuated, their local paper followed them to Edmonton, more than 430 kilometres from home. Even with the ever-expanding availability of news from around the world at our fingertips, it is important that we continue to preserve local perspectives, encourage discourse, and remain a reliable source of credible Canadian news and information.
At Postmedia we have undertaken a massive transformation in an effort to create a company that can survive in spite of this rapidly shifting landscape. But if current trends continue, Madam Chairman, more drastic measures will need to be taken, which could impact publishing schedules, amount of available content, staffing levels, and even the number of titles.
This ultimately affects not just our operations, but other media outlets that have always relied on newspaper content. Radio, television and web still rely heavily on the work of newspaper journalists, even more so as these outlets look to further reduce their own operating costs.
We have committed to taking out $80 million in operating costs over the next couple of years. We have developed new business acumen and offerings and have teamed up with complementary businesses to develop new revenue-sharing opportunities. We're exploring new innovations that can transform our business model, but these efforts are not filling the widening gap fast enough.
In April 2015 we completed the acquisition of the English Sun Media properties in an effort to extend the runway for both companies and brands. When we met the Competition Bureau in the time leading up to receiving the okay for the acquisition, we made the case that this was the option that gave us the best chance to preserve the most brands possible.
In its “no action” letter regarding the merger, the bureau cited a number of reasons why the combination of businesses was likely to result in a substantial lessening or prevention of competition.
So what can be done? How can we work together to preserve distinctively Canadian views and protect access to proud local voices that may be silenced soon?
We very much consider this committee an ally in our quest. But be clear, we're asking the government to be an ally, not for a bailout of the Canadian newspaper industry. As this committee prepares recommendations to take back to the House, we respectively submit that there are things that the government can do to help preserve our industry.
The first is a straight-up sales pitch: come back and advertise in our newspapers and on our websites. As with many advertisers, ad budgets have been cut, and the cuts from the Government of Canada have disproportionally been to newspapers.
According to the 2014-15 “Annual Report on Government of Canada Advertising Activities”, compared with the 2010-11 report, the share of government advertising spending has increased for television from approximately 48% to 54% of the total budget. Internet share increased from approximately 15% to almost double, 28%. The lion's share of that spending went to foreign-owned digital giants who create no Canadian content and employ few actual Canadians. The share for print advertising has been halved, declining from approximately 17% to 8.5%. Also, during 2014 and 2015 Canadian Heritage spent $6 million on advertising, but did not include any print.
We would also ask that the government explore incenting other advertisers to advertise locally. Currently, Canadian companies can write off the cost of advertising with foreign-based digital entities at the same rate as with Canadian newspapers. We would ask that the government consider a higher deduction for advertising with Canadian media.
Another avenue to explore is one of this department's existing initiatives, the aid to publishers program. Expanding the program to include daily publications and free community newspapers could help to support local voices, telling the most relevant stories directly from within the communities they serve.
Recently, Ontario significantly changed the Ontario interactive digital media tax credit, such that it no longer applies to our businesses. But this type of program, which included innovation in digital news and information creation, could be developed into a national program. Supporting innovation in Canadian news delivery could help give our industry some additional runway as we work to create the new model we all see. In a fight for survival, investing in innovation, while absolutely critical, is often what suffers most.
Madam Chair, I would like to again thank you and the honourable committee members for hearing from us today. Our hope is to have been helpful in this important endeavour. We will be available to provide further information should the committee request it of us.
We would be happy to take any questions you may have at this time.
Thank you very much.