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

11:05 a.m.

Liberal

The Chair Liberal Hedy Fry

I call the meeting to order.

As you know, we're doing our media study, which deals with access to local news, Canadian content, etc., across the country, as well as consolidation of media, and its impact.

We have witnesses today as you see on your list. From 11 to 12, we have the Alberta Weekly Newspapers Association online and by video, so we will be able to deal with that. In our second hour we'll be dealing with Glacier Media Group and the Canadian Association of Journalists.

At the same time, I want to quickly tell the committee that Ms. Dabrusin has given us her terms of reference and some of the things that she wanted to deal with. I was hoping, because we have only a small group of witnesses today, that we could take some time to deal with Ms. Dabrusin's thing later on.

Mr. Nantel, you mentioned that you wanted to bring forward a motion with regard to taking time.

11:05 a.m.

NDP

Pierre Nantel NDP Longueuil—Saint-Hubert, QC

Thank you, Ms. Fry.

I'm sorry, Mr. Merrell, Mr. Jamison, and Mr. Kvarnstrom.

It's a simple issue. On Sparks Street right now people are cheering on the Paralympic team. I wanted to let you know that from 10:45—it's already started, which is why we have people cheering—and probably until 12, if you want, I think it would be appropriate for the committee to go and shake their hands or take a picture with the guys and the girls there.

If you think it's a good idea, for the same reason, Ms. Fry, maybe we could start a little late, 15 minutes, with the journalists association and then we would still have 45 minutes to do it.

I think it would be a good idea to send someone from our team, maybe just to let them know that we'll be coming and to have a picture taken. I think the Paralympics didn't have any coverage in the media this summer.

11:05 a.m.

Liberal

The Chair Liberal Hedy Fry

Perhaps the parliamentary secretary could, because the Minister of Sport might want to say that we would come over.

Does everyone agree? I need to get a sense of whether everyone agrees with Mr. Nantel.

11:05 a.m.

Some hon. members

Agreed.

11:05 a.m.

Liberal

The Chair Liberal Hedy Fry

Therefore, if we're going to do that, I would like to get the committee's permission to do one round of questions for this first hour. That would leave us off early enough to be able to do what we are suggesting we do. Okay? We can do the same thing in the second hour as well.

11:05 a.m.

Some hon. members

Agreed.

11:05 a.m.

Liberal

The Chair Liberal Hedy Fry

All right. I want to welcome the witnesses.

Thank you very much for taking the time to present to us. Here's how it works. Each group will have 10 minutes to present. Then we will have a round of questions, and those rounds of questions will last seven minutes. The answers are included in that seven minutes, so everyone will have to be as crisp and as terse as they can in terms of getting the questions and answers out.

I would like to invite Mr. Dennis Merrell, executive director of Alberta Weekly Newspapers Association, and Mr. Duff Jamison, the chair of the government relations committee of the Alberta Weekly Newspapers Association, to begin.

Proceed, and I will give you a two-minute warning when your 10 minutes is going to be up.

11:10 a.m.

Duff Jamison Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association

Okay, thank you.

Good morning from Edmonton, Alberta. My name is Duff Jamison. I am the president and CEO of Great West Newspapers, which publishes 18 newspapers in Alberta. In my role as government affairs chairman, I am representing the Alberta Weekly Newspapers Association today, and I have with me Dennis Merrell, our executive director.

Community newspapers seem to be flying under the radar in the discussion about print media's future. Although they look and feel the same as our larger metro daily cousins, we have some unique qualities that differentiate us.

Print advertising remains the mainstay of any newspaper model, daily or weekly. Community newspapers rely primarily on local businesses, community organizations, schools, and local government, and somewhat less on national advertising and classifieds, which were once the major revenue streams for the dailies. I'm not suggesting that national advertising isn't important; it most certainly is, and this category for us and for the dailies has experienced the greatest decline over the past years.

The majority of community newspapers tend to free distribution and total market coverage. As a result, distribution of advertising inserts has become an important and reliable revenue stream for all of us. Community newspapers generally serve market populations of less than 100,000, and the majority would be well under that. We are the original hyper-local guys providing the primary source of local news for our residents in a very cost-effective means for local advertising.

Our once or twice per week frequency also distinguishes us from our daily cousins. Our news is rarely of the breaking-news variety, and our readers seem comfortable with the fact that it's not available in print every morning. They need and want to know what's happening in their community, but they don't demand it the minute it happens. When it is important to get the story out quickly, we are all quite capable of doing that on our digital platforms. We may lack the digital horsepower of, say, The Globe and Mail, but we're certainly not in the dark ages either.

Free content—the nirvana of the digital age—is old news in the community newspaper industry. Although many paid subscription weekly newspapers remain in small markets, in the larger markets we've long delivered community news free to our residents, paid for by our advertisers wanting total market coverage. Paid circulation dailies, on the other hand, have experienced a significant decline in print penetration as subscribers drop off because national and international news is so freely available online.

The real secret sauce of a successful community newspaper is operating like it's community owned. It's not an arm's-length operation, as can be the case in a daily, but is in the trenches as active participants in our communities, a service club of sorts, really. I often tell our local politicians and community leaders that, like them, we are in the business of building stronger and healthier communities for everyone. We are fully integrated into the community, leaving no doubt in anyone's mind that we have the best interests of the community in mind. When done right, the newspaper earns credibility and respect among its readers and their support when we criticize leaders and institutions that we feel have let the community down.

What is the current picture for community newspapers? Print advertising revenues, far and away the largest source of revenue for Canada's community newspapers, are in decline. Digital advertising revenues tied to our news reporting remain insignificant simply because community newspaper websites and social media feeds do not generate the traffic required to cover the reporting costs. It's not even close today, and we don't think it will be in the foreseeable future.

There are opportunities in providing advertising services on non-print or digital platforms: social media, search, and geo-targeting, and community newspapers are pursuing them where they see benefits for their communities and their customers. It's still to be proven, however, whether a small market can generate sufficient digital profits to support local journalism, and I have to admit that the idea of operating a secondary business to support the news reporting functions of the primary business doesn't feel quite right.

Subscription and newsstand revenues are an important source of revenue for a declining number of paid circulation community newspapers. However, with circulations of less than 5,000 and subscription rates of about $50, these also fall well short of covering reporting costs. Paywalls help to protect this revenue, but also reduce online traffic and digital advertising revenue with it. It's very difficult to see a point at which print advertising revenues will not be the major revenue contributor for even paid circulation community newspapers.

There's no reader revenue in a free paper, and most community newspapers in Canada are not paid for, leaving them to rely entirely on advertising to pay the cost of reporting the local news.

These papers tend to be in larger markets, often on the periphery of metro areas also served by dailies and other media. For that reason, no Canadian community newspaper has been able to maintain a paid circulation in the metro markets. We also require total market coverage to satisfy the market penetration needs of our advertisers, both in print and in inserts.

Not often mentioned in the discussion is that many local advertisers and organizations remain dependent on local media to reach local residents and consumers. In most communities under 100,000, print media deliver the largest audience by far. Although most small businesses have websites, Facebook groups, Twitter feeds, etc., it has proven very difficult to build any real mass of followers. Therefore, without the market penetration of local media, most would find it extremely difficult, if not impossible, to reach the vast majority of local residents.

On top of their marketing needs, these businesses have their own challenges brought on by globalization and the digital revolution. Online competitors, among them Amazon and mega-retailers like Walmart, threaten the very viability of these local businesses, which are the foundation of advertising support for community papers. Just as is the case with local media, government, and a well-functioning democracy, the threat to local media's long-standing symbiotic relationship with local advertisers goes much deeper than print media's problems.

Community newspapers, like all media, must compete for the readers' time. We know that time is finite. Time spent on digital devices is made up by reducing time spent on other activities, including reading, watching TV, listening to the radio, etc. Unfortunately, it is not always productive time—things like Candy Crush, Pokémon, and cat videos come to mind—yet somehow publishers must navigate through the clutter to deliver the local news.

Most worrying of all is that it seems fewer and fewer people really give a damn. It brings to mind the old saying that they won't miss us until we're gone. In our affluent western societies, for the most part, people are content with their lives and disengaged from politics to a large extent. Their complacency—and for some, disenchantment—is evidenced by low voter turnouts and lack of interest in joining community and civic organizations created to build better communities. It is unlikely that the general public has given much thought to a world without media watchdogs.

Does government have a role? It probably does. Here are some ideas we should all think about.

The federal government could replenish its print advertising budget. While local governments remain solid advertisers, federal and provincial advertising has nearly dried up. A decade ago, the federal government spent 47% of its ad budget on newspapers: 28% on dailies and 19% on community, ethnic, and aboriginal weeklies. In the 2014-15 fiscal year, it spent 7% in total on newspapers: 1% on dailies and 6% on weeklies. In that same period, the spending on Internet companies rose from 6% to 28%. Most of that money went to U.S. firms, such as Google.

Simply having the federal and provincial governments make a serious commitment to include community newspapers in advertising budgets would go a long way toward supporting local journalism. As the publisher of the Rainy River Record in Ontario said to a CBC reporter this week about the closure of his paper next week, the government's decision to pull its advertising budget from newspapers and spend it on social media has made a big difference.

The tax system is another source or possibility. Is there a role for the tax system, as suggested in a recent Quebec report and advocated by some groups appearing before the Canadian heritage committee? Could Canadians buying subscriptions to Canadian media claim tax deductions on the same level as they do for donations to political parties, a 75% rate? Is there a way for the federal government to encourage Canadian companies to spend their advertising dollars here? This could be in the form of tax credits or penalties for using foreign firms, as we see in the Foreign Publishers Advertising Services Act. The Income Tax Act limits non-Canadian legacy media, but this has not been applied to digital enterprises. Tax incentives could be created to encourage investment in newspapers and other local media. Instruments could include—

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

I am going to have to ask you to wrap up, Mr. Jamison.

I gave you the two minutes signal two minutes ago. You are really over 10 minutes now.

Perhaps you could get in some of the things you wanted to say when the questions are being asked. You could make your points then.

11:20 a.m.

Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association

Duff Jamison

I would like to discuss the aid to publishers program, copyright law, and some ideas about how we can share digital revenue with some of those Internet giants, and maybe touch on Canada Post while we're at it.

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

The committee members have heard you and will probably try to get those things into some of their questions to facilitate that.

11:20 a.m.

Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

I have a response. Thank you so much to witnesses for being so very patient with us.

As you know, the Paralympians are right outside this room. Our committee is also responsible for sport, and we wanted to go and cheer the Paralympians on. You heard us talking about that. I have a message for the committee. The parliamentary secretary has said that the mayor is just wrapping up his speech now and we have no guarantee that the Paralympians will stay long after that. I want the committee's sense of what we should do. Do you think we should postpone our questions and run out there?

The Parliamentary Secretary for Sport will speak quickly.

11:20 a.m.

Liberal

Stéphane Lauzon Liberal Argenteuil—La Petite-Nation, QC

I'm available to go for you, or if you want to go, we'll have to go right now.

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

What is the committee's wish? Should we go if the guests would allow us to do that?

11:20 a.m.

Liberal

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

We should if they'd allow us to.

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

We're sorry, we're asking you a big favour. Would you let us run out for about five minutes and then come back and get into the question period?

11:20 a.m.

Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association

Duff Jamison

Yes, that's fine with us. We understand.

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

I promise you we will make it up to you.

Thank you so much for your generosity.

We will suspend the meeting.

11:20 a.m.

Liberal

The Chair Liberal Hedy Fry

The meeting is called to order.

I want to thank our witnesses for their generosity in allowing us to run off and do that. We are the committee responsible for sport as well, so this was an excellent opportunity.

I want to thank Mr. Nantel from the NDP for making the suggestion, and I want to thank the members for being so quick in coming back.

We will go into the first round of questions.

Mr. Jamison, I think the members are very well aware of the things you would like to bring forward that you did not get to do in your presentation.

We will begin with Mr. Vandal and Mr. Breton, who will share seven minutes. They're from the Liberals.

11:20 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

Thank you very much.

First of all, thank you for your co-operation in allowing us to visit the Paralympians. It was very generous.

I listened intently to your presentation, and the narrative is very familiar: print advertising in decline, digital revenue is negligible. I want to focus on solutions. I know that you did not have a lot of time to do that, but give us some of your solutions for an increasingly social media world that produces zero local content and captures a lot of the advertising revenue.

I'll give you a couple of minutes to elaborate on that.

11:35 a.m.

Chair, Government Relations Committee, Former President, Alberta Weekly Newspapers Association

Duff Jamison

I think as we broke off, I had touched briefly on the tax system. I'm far from an expert on the tax system, so I'll let that one go. I see you have our written presentation. It's in there.

Let's talk a bit about the aid to publishers program. That program was originally designed by Canadian Heritage in co-operation with Canada Post to subsidize the distribution of paid weekly newspapers and Canadian magazines. That has since been modified, but it still applies only to those two groups.

It seems to me that if we could expand that program beyond the paid weeklies to the free weeklies.... The free weeklies are not of any less quality than the paid weeklies. They're often equal to or better than many of them.

It would require the government to top up the funding for that particular program. I think it's around $75 million today. That won't stretch very far if we expand the number of newspapers that would be eligible for the program.

That's one that I think we have to look at. It's already in existence. It seems to be kind of an obvious one because it's already there.

September 22nd, 2016 / 11:35 a.m.

Liberal

The Chair Liberal Hedy Fry

Thank you.

Mr. Vandal, do you want to continue? We have another five minutes left.

11:35 a.m.

Liberal

Dan Vandal Liberal Saint Boniface—Saint Vital, MB

I will pass it over to Mr. Breton.

11:35 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you, Madam Chair.

Hello everyone. Thank you for your presentation and for the various solutions that you proposed.

Representatives of different industries that spoke to the committee recommended that the federal government create certain tax credits. I would like your opinion on advertising purchases on traditional media platforms such as radio, newspapers and television, and on other payroll tax credits allowing the hiring of employees to work in digital technologies.

I would like your point of view on the solutions proposed on several occasions by industry representatives.