Canadian Heritage Committee on May 12th, 2016

[Paul Godfrey]

Well, those incentives would be to be able to attract more eyeballs to us. The more eyeballs we were able to attract, the more unique visitors we would get and the better the chance we would have to compete.

Right now, I don't think there's a newspaper company that could spend very much money at all on capital expenditures to basically achieve any level of competition.

Right now, for instance, Google—which is a great company, I'm not denying that, and I don't want anybody to misinterpret this—is a company I use every day; probably everybody uses Google. But they have in Canada alone about 30 million unique visitors a month. We are the leader amongst the news and information category, at about 12.6 million unique visitors per month.

The fact is that people are going to spend more to get to more eyeballs to attract advertisers in those areas.

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

Mr. Godfrey, you were the first newspaper to go digital and you thought that everyone was going to follow you with money. It didn't happen. Maybe just talk about that, because when you guys decided to go digital and back off on the print, it was a big shift in the newspaper industry. As we've seen, people really don't want to pay the 99¢ a month for the copies or a tablet that other newspapers are doing.

That was a big shift. Maybe just talk about that, because we've heard dollars to dimes, and that's one of the issues here.

[Paul Godfrey]

Very quickly, when I was at Sun Media, we started Canoe there. Canoe was a great success. We gave away the content free at that point in time. The issue is that, to compete against Google and Facebook, you couldn't keep up with the number of eyeballs that weren't watching us.

First of all, we've never given up on print. We couldn't give up on print. If we gave up on print, we'd be out of business tomorrow. Print still makes up the bulk of our revenue, even with the dramatic drop-off. We're now seeking alternatives.

Why did we charge for it? I don't know of another company that spends millions of dollars on content and then gives it away free. It would be like any other organization saying, look, we make cars, but we'll give them away free. We just can't do that.

So that's why we're seeking....

Doug, do you want to say...?

[Doug Lamb, Executive Vice-President and Chief Financial Officer, Postmedia Network Canada Corp.]

Yes. I was just going to say that I think it was successful from the perspective of audience. The newspapers reached 13 million people, digitally; it was multiples of what we ever reached in print. But the advertising dollars that support that content.... We estimate that as high as 70% of digital advertising is captured by Google and Facebook. Everybody else—our entire industry and many other new participants—are left to fight over the remaining 25% or 30% that's left.

I think that's why it hasn't worked. It's not from an audience perspective. The advertiser dollars are all flooding to two large oligopolies, almost.

[Paul Godfrey]

Our readership is up across Canada.

[An hon. member]

Yes, I see that.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Waugh.

Next is Mr. Nantel, for the NDP.

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

Thank you, Madam Chair.

I assume the witnesses all have their headphones on so they can listen to the simultaneous interpretation?

I'll ask a question first, before you're all settled up.

Mr. Godfrey, with all that you've been through in your life, all the transactions you've done, you could go and play golf and not bother about all this. Why did you come here? You know you're going to be asked “Why would we support you?”

Why are you doing this?

[Paul Godfrey]

You must have been speaking to my wife.

[Some hon. members]

Oh, oh!

[Paul Godfrey]

I guess I'm at an age in life—I don't mind saying it, I'm 77 years old—and always liked a challenge in life. I'm a great believer that it is important that a democratic country should have a media component that's available to challenge people, to challenge government, to challenge business. This is probably the most difficult challenge that I face.

I've run a sports team, and I thought that was a difficult challenge, because there can only be one winner, but this is a challenge because we have thousands of employees across this country.

Journalism is a very important thing for a country to have. Competitive journalism is even more important. I do this because, first, I love a challenge, and as long as I have good health and am able to continue, I will do it.

Money is not an object for me personally. I've been very fortunate in life.

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

Yes, that's what I mean.

[Paul Godfrey]

I can only drive one car at a time. I only have as many suits as I want at the present time. The whole aspect of this is to seek a solution.

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

That's what I wanted to hear. I knew the answer, and that's why I asked the question. Obviously, I think it's very chivalrous of you to come to say things like this, knowing that you're going to be attacked, because clearly between foreign ownership and foreign control there is a nuance.

I will speak in French now because the subject is getting more complex.

Mr. Godfrey, thank you for being here with us today.

Everyone agrees of course that too much advertising money is being spent on international platforms that do not have any local offices in Canada. They do not have any employees, do not collect any taxes and contribute nothing, absolutely nothing, to our society. People do of course have reasons for using them though. They offer a social network, which has its benefits. We cannot stand in the way of progress. People are there and the advertising industry has stemmed this trend. If they weren't foreign companies, the argument that they do nothing for Canadians would not even be raised. If they were Canadian companies, we would be happy to have strong companies that make money through good advertising on the social media that people use.

My question is for Mr. Nott or Mr. Lamb.

Do you think that—and I am not a specialist in international agreements—instead of saying “buy Canadian” or “buy American”, we should say “advertise Canadian”? Would that violate any laws or international trade agreements?

[Paul Godfrey]

I believe this thing can be tailored in any way possible. I know that there is some adversity in saying “buy Canadian”. I think we do things as a country in many fields to protect industries.

The Government of Canada and the Government of Ontario we know asked for a bailout for the auto industry. We're not suggesting a bailout at all here. I'm not suggesting that you pay our debt, that you suddenly come forward and write us a cheque. I think that is out of the question.

We come here to seek a solution.

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

Oh, absolutely. Don't get me wrong. I'm asking you a very technical thing and I'm expecting a short answer.

Would it be okay with these trade agreements internationally to have some policy of buying your ads from Canadian ad suppliers?

[Paul Godfrey]

There's nothing to stop that.

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

Good. That's good news. Thank you. We take note of that.

I wanted to ask you, do you think that advertising agencies and

advertising agencies are exaggerating

the tendency towards the Internet?

Is there some explanation for that? Is there someone or some entity that benefits from the fact that social media are like the wild west with respect to rates and that they can get better commissions? Are they exaggerating the trend? Le Devoir, for example, has opted to remain a print newspaper. Some people still like to read a printed newspaper. On Saturday mornings, I have La Presse+ and La Presse in print format and choose the latter.

In short, do you think advertisers are showing bad faith by directing people to online platforms because it is more profitable for them?

[Paul Godfrey]

The answer to that is that many of the ad agencies, as they reflect national news—because most advertisers, if they're a national company, and a lot of the new people at these agencies, are 25- to 30-year-old people—

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

—as has always been the case: new, trendy people.

[Paul Godfrey]

—who don't read newspapers but go to the digital form....

You have to realize that the public at large today want the news when they want to receive it, and on the device they want to get it on. Advertisers know, and they can monitor much better in the digital format than they could ever do in print, the impact of an ad.

So to answer your question, yes, in the agencies the recommendations usually go up the ladder from a younger person who is more oriented to the digital life.

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

But there is no unfair advantage for them in this, just a tendency because they have new people with new ideas.

[Paul Godfrey]

Yes, and when you have the opportunity, and that's why newspapers started off...and it's probably due to our own delay in thinking.

Back when we had a recession, everyone thought the fall-off in print advertising was totally caused by the recession. It wasn't; there was a structural change taking place.

When I came back to the industry after I left the Toronto Blue Jays in 2000, I said, “Wow, this industry has really changed”, and the people there started telling me no, it's going to come back in a couple of years. Instead the decline continued.

It's because these new devices came along. Mr. Van Loan asked me about innovation. I think the total industry all over the world were caught sleeping, and now it's probably time for catch-up, which is difficult, because you don't have the capital dollars.

To give you one example—

[The Chair, Liberal, Hedy Fry]

Mr. Godfrey, I'm sorry, the seven minutes are up. You may want to address that to the next person who asks you questions.

Now we're going to go to Mr. O'Regan for the Liberals.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

Mr. Godfrey, I'll let you finish your point, and then we can carry on.