Evidence of meeting #25 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was advertising.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Duff Jamison  Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association
Dennis Merrell  Executive Director, Alberta Weekly Newspapers Association
Peter Kvarnstrom  President, Community Media, Glacier Media Group
Hugo Rodrigues  Past President, Canadian Association of Journalists
Nick Taylor-Vaisey  President, Canadian Association of Journalists

12:05 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

No, I'm good.

12:05 p.m.

Liberal

The Chair Liberal Hedy Fry

Okay.

Gentlemen, I want to thank you again for your generosity in allowing us to run off and leave you sitting here while we went out and met the Paralympians. Thank you again for your presentation.

We will just take some time while we get the other group to come on.

12:05 p.m.

Liberal

The Chair Liberal Hedy Fry

Perhaps we could begin.

We have two groups. Each group, not each person, has 10 minutes to present, and then there will be one round of questions, each of which is a seven-minute round, and the seven-minute round will include questions and answers. We're running on a timeline now. We're five minutes late, but we know what happened to create that.

I would like you to begin, please.

Mr. Kvarnstrom.

12:05 p.m.

Peter Kvarnstrom President, Community Media, Glacier Media Group

Good afternoon. My name is Peter Kvarnstrom. I live in West Vancouver, B.C. and have since 1965. I am currently the publisher of the North Shore News, the Bowen Island Undercurrent, which is our very smallest newspaper in our group, as well as the Coast Reporter, in Sechelt, British Columbia, where I started that paper in 1997.

I also hold a corporate role with Glacier Media Group as the president of their community media division. Glacier Media Group is a publicly traded Canadian information company headquartered in Vancouver, British Columbia. Glacier's community media division encompasses 55 fully-owned community newspapers and their associated digital and print specialty products. Glacier also has interest in nearly 40 other newspapers where the partner is the operating entity.

Mr. Nantel, you mentioned that we are partners with Duff Jamison's Great West news group.

I have also served as president and chair of the Canadian Community Newspaper Association, as well as chair of the Canadian Newspaper Association representing dailies and community newspapers. I currently chair the management committee of Newspapers Canada, which you heard from earlier in this session.

Today I want to share with you some facts and thoughts about the industry and some challenges that we face. I will also suggest some courses of action that the Government of Canada may consider in ensuring that local journalism continues to serve communities across the country. I will try to avoid repeating some of the same points that were made earlier.

First, I want to ensure we recognize that the challenge of our sector is not an audience engagement issue. According to our most recent research conducted by Totem research earlier this year with 2,400 Canadians represented across our country, balanced for age, sex, language, and conducted in both English and French, 87% of Canadians continue to engage with our journalism and the advertising across our channels. They look at our newspapers, our websites, our tablet apps, and our mobile platforms every week.

While the channels are changing and providing easier and faster access to our content, Canadians continue to rely heavily on our Canadian-created local journalism to keep informed about news, community happenings, births and deaths, civic and regional politics, and much more.

We employ hundreds of journalists across our organization, and thousands across our industry. Our journalists work tirelessly to tell the stories in every community that we serve. Their work helps us ensure that our readers and all Canadians have access to the stories that matter most, the local ones.

The journalism we create is rarely urgent or breaking news. Local journalism is relevant, compelling, and unique. Our journalism speaks directly to our readers about their community and their neighbourhood. It reflects the communities that we serve. We see ourselves, our friends, and our neighbours in our pages. Most importantly, we write and tell the stories that no one else does. Our content is truly unique and is under significant pressure.

In most cases, we are the only source of local news and information in our communities. There are many sources of regional, national, and international news and information, but our industry is the only one to employ journalists in every community we serve, which is more than 1,000 communities across Canada.

In many cases, our work is the only way to hold both private and public institutions to account. We believe that local journalism and the work we do is vital to ensuring a thriving democracy and a civil society. We truly help to improve the quality of life in every community we serve.

Community newspapers are under tremendous pressure. Our business model is under significant challenge, based on advertising revenues declining. The relentless loss of single-digit revenue percentages every year forces publishers to reduce their cost base continuously. We do our best to avoid reducing our reporting staff, but no department is spared as we try to adjust our cost base to our revenue realities. We simply can't afford to operate the way that we did in the past.

Local, regional, and national advertisers simply have too many advertising choices in front of them. They still buy advertising from us, just less. They are trying to remain competitive in an increasingly digital age when they themselves face huge online mega retailers. We know whom we are referring to.

What can government do to ensure the survival of local journalism and the publishers that employ them? First, we are not looking for a bailout, but government support as we transition from an industrial business to a knowledge-based one.

Federal government advertising has declined by 96% in newspapers over the past decade. Provincial government advertising has followed suit. Local governments, much as Mr. Jamison said before me, continue to rely on community newspapers because they work. They connect their constituents like nothing else. MPs individually spend their advertising dollars with their community newspapers because they know they are read thoroughly, and they engage their constituents. The federal government has an opportunity to truly communicate with Canadians in every corner of our country by using our community papers and their websites, yet they choose to spend our tax dollars with U.S.-based behemoths like Google and Facebook.

We ask the government to help us review our advertising model, recognizing that paid advertising pays for the journalism and its distribution. Instead, we are watching that advertising flow south of the border to those same corporations mentioned earlier that do not pay significant taxes in Canada, do not employ significant numbers of taxpaying Canadians, and rely on content that they are taking directly from Canadian creators. They have found a way to monetize our content to an incredible level.

Fair dealing within our Copyright Act is a significant detriment to journalism in Canada. Our creators and publishers pay to create content that many news aggregators, including the CBC, republish, copy, broadcast, and sell advertising without compensating the creator or the copyright holder. This must be addressed.

We would suggest a number of taxation strategies—and again, I'm no taxation expert, and we don't have any—that could make a significant difference to the community newspaper publishers. First, consider making all subscription and newsstand sales of newspapers a tax deductible expense for every Canadian, encouraging them in a very small way to subscribe or buy their community newspaper. Second, revise the tax laws that allow advertising that is being bought from foreign owned and operated media companies. Are they to be allowed as a tax deductible expense? They are today: not in print, but in Google; it seems it's okay. Why should money spent with Google be tax deductible for businesses?

Finally, consider revamping the Department of Canadian Heritage's aid to publishers program. Currently only very small paid subscription newspapers qualify for that aid and we do appreciate it and it does keep those papers going. Our company publishes some very small papers that would not be around without that program.

In today's publishing reality, many community newspapers have had to give up on paid subscriptions to compete with free media available on the Internet. Those papers serve their community exactly the same way as the paid subscription papers. Provide an expanded program for improved funding to include all community newspapers.

As publishers of many small-town community newspapers, we feel the obligation to serve. In many cases, it is no longer about the money we once earned, but rather the obligation to serve the communities where we live. We do not want to abandon small towns or any communities; however, we need government to accept some of the responsibility and obligation to ensure that we can continue to serve Canadians for many years in every corner of our great country. Simply put, the work we do matters to all Canadians in every community in Canada.

Thank you for your time and caring.

12:15 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much, Mr. Kvarnstrom. I must tell you that you came in exactly on time.

We now have our second group, l'Association canadienne des journalistes, and we have Mr. Hugo Rodrigues. We now have Mr. Taylor-Vaisey from the same group online with us.

You have 10 minutes for both of you, so would you like to tell us how you'd like to divide that time?

12:15 p.m.

Hugo Rodrigues Past President, Canadian Association of Journalists

Certainly. Nick will start us off; I will speak for a period of time, and Nick will wrap up the presentation, and then we'll carry on.

12:15 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you.

Mr. Taylor-Vaisey.

12:15 p.m.

Nick Taylor-Vaisey President, Canadian Association of Journalists

Thank you to the committee for inviting us to appear today.

I am Nick Taylor-Vaisey, president of the CAJ. I'm here today in that capacity. I should be clear that I do not speak on behalf of my current employer. I'll be sharing my time with Hugo, who is, as you know, the CAJ's past president.

Today we're speaking to you in Ottawa and from Toronto, but our national board represents almost every corner of Canada. We see that as a strength, even if it does make our board meetings across several time zones tricky to schedule. It's a strength because the CAJ is a truly national association of working journalists, with members all over the country and across all forms of media.

Before we offer you our thoughts on how the federal government can proactively, if non-intrusively, encourage high-quality journalism in Canada, allow us to tell you just a bit more about our organization.

The CAJ was founded in 1978 as the CIJ, the Centre for Investigative Journalism, a non-profit organization that encouraged and supported investigative work. Over the years we broadened our mandate, and now offer three primary services to our members: high-quality professional development, primarily at our annual national conference; outspoken advocacy on behalf of journalists and the public's right to know; and an awards program that honours the finest journalism in Canada, both investigative and across several other categories. That program, we're proud to say, is affordable for our members.

Our members are the working journalists who are responsible for outstanding reporting that changes lives, forces governments to do better for Canadians, and ultimately serves the public interest. They're local reporters who keep their eye on city hall when few others are watching, and who simply report the news that better informs their community. Of course, our members are often the first to feel the brunt of layoffs that have cut so deeply across so many newsrooms across Canada.

We're here today to provide two modest recommendations that would allow more storytelling in more local newsrooms and help stem the tide of job losses, at least to some degree, in those same newsrooms. The first recommendation is that government provide incentives to prospective local advertisers in Canadian communities. The second recommendation is that government make it easier for non-profit journalism to take flight in Canada.

I'll now pass the floor over to Hugo.

12:20 p.m.

Past President, Canadian Association of Journalists

Hugo Rodrigues

Thank you, Nick.

You've heard in prior testimony to this committee what you no doubt already knew, that media are facing a revenue problem. Advertisers are able to exploit digital opportunities that offer more eyeballs and a larger audience share. This has irrevocably shifted balance sheets at media companies across Canada. First it was the classifieds, then the national advertisements, and now it's hitting at every level.

Just this week, as referenced today in earlier testimony, Rainy River Record, a paper that has served its readers for almost a century, announced that it will stop publication this month and shut its doors. Why? The Record's publisher said that two of its major advertisers, the Government of Canada and the Government of Ontario, have chosen to, as he put it, “shun newspaper advertising” in favour of global giants like Google. That closure represents yet another blow to all newspapers in both Ontario and across Canada.

Put simply, as revenue drops, many media owners cut expenses by laying off journalists. With fewer human resources in those newsrooms, less journalism is produced, and journalists spend more time chasing audiences that generate potential new online revenue than they do investing in high-quality content. With less content available and the quality of that content dropping, audiences look elsewhere for the information they want. All the while, revenues continue to drop.

Bob Cox, chair of the Canadian Newspaper Association, told this committee earlier this year, on May 31, that the “federal government could find ways of encouraging Canadian companies to spend their advertising dollars here”. The CAJ supports that view. We're not proposing a regulatory solution to the pervasive revenue question that's gone largely unanswered in many media companies, both big and small. To be certain, different markets face different pressures, and some have more success than others, but there's a clear and urgent need to find creative solutions for those communities in need.

The CAJ does support, generally speaking, government making it easier to invest in Canadian media, such as a tax break for local advertisers who currently see no advantage in placing their ad in their local newspaper or on the air with their local broadcaster. We know that when local media can raise enough revenue from their own communities, they can thrive. Let's offer an incentive for companies to invest in the journalism being done in their backyards.

When media companies can cover their expenses through the revenues they raise from advertising, they can and they do invest in quality, namely, content that informs Canadians about their roles and responsibilities in a civil society, that shines a light in dark places, speaks truth to power, and comforts the afflicted.

Nick, back to you.

12:20 p.m.

President, Canadian Association of Journalists

Nick Taylor-Vaisey

We also think government can play a useful role in the non-profit world, which can play a crucial role itself in public interest reporting and public education. This is, of course, distinct from public broadcasters such as the CBC and its public broadcasting counterparts, including Ontario's TVO. The CAJ believes Canada should embrace non-profit journalism as other countries, including the United States, already do.

To cherry-pick just one example from many, ProPublica is a charitable organization south of the border that counts itself as one among many so-called 501(c)(3) non-profits. That's a reference to section 501(c)(3) of the U.S. Internal Revenue Code, and it allows qualifying organizations tax-exempt status for the purposes of, among other goals, public education.

Now, that doesn't mean transforming local reporters into civics teachers, though we certainly find ourselves playing that role from time to time in our communities. ProPublica describes its investigative reporting as work that “shines a light on exploitation of the weak by the strong and on the failures of those with power to vindicate the trust placed in them.” It's not exactly the sort of thing you'll find in an elementary school classroom, but it's certainly as valuable.

Non-profit journalism does exist in Canada. The Walrus Foundation, the Tyee Solutions Society and the Aboriginal Peoples Television Network all operate as charities, and with success. They've proven that charities can fund journalism.

But there are far fewer examples in Canada than there are elsewhere in the world. The Knight Foundation in the U.S. and trust-backed The Guardian in the U.K. are but two examples of journalism-focused philanthropic initiatives that simply have no equal in Canada. Non-profit media organizations have created compelling, groundbreaking stories that educate and inform their audiences about how their society works. Civic education is lacking in Canada, and while non-profit journalism isn't a panacea for this problem, any government action to create and foster a friendly business environment to invest in these organizations can only help enable more of them to get started and flourish.

The more media outlets, whether traditional, mainstream, online, etc., that operate in Canada, the more informed our residents will be, and that will only strengthen our democracy.

Thank you for your time today.

12:25 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much.

Now we will go to the questions. We have the first round, again, for seven minutes. We will begin with Mr. Samson from the Liberals.

12:25 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

Thank you.

I just want to let the chair know that I will be sharing my time with Ms. Dabrusin.

12:25 p.m.

Liberal

The Chair Liberal Hedy Fry

Oh, we thought Ms. Dabrusin would have her own seven-minute slot.

12:25 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

Well, that's fine.

12:25 p.m.

Liberal

The Chair Liberal Hedy Fry

Those are the two names we were given.

12:25 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

Well, we're in sharing mode today, I can tell.

Thank you very much for the presentation. Those are two very interesting topics, one in the journalist category, if you will, and the other one, of course, local news.

I have to say, Mr. Kvarnstrom, that I was touched when you made mention that MPs announce in local papers, and that's very true. There's no question about it. I was superintendent of all the French schools in Nova Scotia for 11 years and I would tell my board that I advertised, I put things on various media, and they would ask if I put it on this specific local paper. When I said no, they'd say, “Then you didn't advertise.”

Absolutely. Newspapers and local media make a remarkable contribution to the vitality of communities.

My first question is for Mr. Kvarnstrom.

Do you believe certain aspects of the media industry in Vancouver are particular to your province?

12:25 p.m.

President, Community Media, Glacier Media Group

Peter Kvarnstrom

My apologies, I did not have my earpiece in, Mr. Samson.

12:25 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

No problem.

My question is, do you think that there's something particular to your region in Vancouver, in B.C., in this industry that we should take into consideration?

12:25 p.m.

President, Community Media, Glacier Media Group

Peter Kvarnstrom

Thank you for the question.

Our company publishes throughout western Canada. We have 19 papers in Saskatchewan and quite a number in Manitoba as well. The concerns are consistent across all areas. There's no doubt that the economic well-being of a community or even a region does play into how well we're doing. Currently in British Columbia our papers are performing financially a little bit better than they have been in the past number of years, and in Alberta, of course, we're struggling terribly. In Saskatchewan it's become a very difficult situation, especially in the southeast, and now, of course, in the potash areas as well where the local economy is just not as strong, so those are concerns. Other than that, the concerns for our industry are consistent across the country, and certainly across our organization.

12:25 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

I appreciate that you shared many good suggestions for our committee to review about how we could make some changes that might best support local news and sports.

All the people who appeared before the committee spoke of major changes in the government's advertising, and so on. When did this start? For how long has a major change been observed in the Government of Canada's advertising strategy?

12:25 p.m.

Past President, Canadian Association of Journalists

Hugo Rodrigues

Good question. Mr. Kvarnstrom may be able to give you more details than I could on the matter.

In general, the way people consume information in the various media has changed. Companies and the government are advertising differently. If a digital advertisement can reach 50,000 people through Facebook, Google or Twitter, but a local radio station can reach only 20,000 people, and if the company has had the same advertising budget for the past 20 years, then logically the company will choose the media platform that helps it reach as many people as possible.

I can't say specifically whether the change occurred 5, 10 or 20 years ago. More and more people use digital platforms for information, news, television, radio, telephone, and so on. The change was gradual.

12:30 p.m.

Liberal

Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS

The statistics clearly show that today people use mostly digital media. It's probably a part of the strategy. However, the government is still responsible for supporting the communities and local newspapers.

You spoke of tax credits or something of that nature. Can you tell me how they can be applied?

12:30 p.m.

Past President, Canadian Association of Journalists

Hugo Rodrigues

Certainly.

I will refer to my answer to your last question.

If I could reach 50,000 people by advertising in a digital media platform, whether through the website of my local newspaper, Google or Facebook, I would do so. For many communities, spending $500 on advertising in Google and Facebook is less expensive than advertising in local media.

We are asking you to think about incentives to offer Canadian companies that choose to invest in local media, in order to make that choice more reasonable, effective and beneficial. If I received a $50 or $100 credit for $500 invested in advertising in a local newspaper, or if I didn't have to pay taxes on the amount but I would have to pay taxes to advertise on Facebook, the dynamic would change a bit. Companies would start thinking it would be worthwhile to invest in local media.

12:30 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you very much.

Your seven minutes are up, Mr. Samson.

We 're going to move to Mr. Waugh, please.

12:30 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

I'm going to deal a little with Glacier because you have a number of properties in the province of Saskatchewan, where I'm from. It's funny because we just got The Western Producer into the office this week. It hasn't changed much over the years. I have to admit to you that it's the bible in our province. It always has been for farming. It always will be. It's thick; there are lots of ads. You're doing okay with that niche, I would think.

Maybe talk about that. As I said, that has always been the paper that farmers have gone to in western Canada. It's interesting because I was in media prior to being an MP. We used to get all the local newspapers in the province into the newsroom so we could pick away at your stories that you had done over the last week or two. We don't do that anymore. Yesterday I was in the Library of Parliament where I saw all the major newspapers in the country, but I didn't see the second tier of newspapers. I may be wrong; they may be there. I didn't spend a lot of time. If I wanted to see some of those secondary newspapers, it certainly wouldn't be in the Library of Parliament.

I see you've done fairly well on The Western Producer, but I know that your mining papers are suffering right now because of the commodities situation.