Canadian Heritage Committee on Sept. 29th, 2016

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

Mr. Honderich, I'm somebody who's familiar with your paper, and when I say paper, I mean the Toronto Star. I don't read it as often as I used to, but I'm a big fan of Toronto Star Touch. You invested an awful lot of money in that a couple of years ago. I think it was $25 million at the outset, and some $10 million a year since.

If I had been listening to the proceedings of this hearing and if I were the patriarch of a newspaper as you are, I would probably do some of the same things. I would make a dedicated online platform that embraced tablet technology and was specific to it, modelled after La Presse+, which Monsieur Nantel brings up as a model time and again, and rightfully so. It's beautifully designed.

I would put money into good journalists, like Emma Teitel or Paul Wells. You may not always agree with them, but they're smart and they know what they're doing. I would invest in big stories. I would invest in newsrooms. If there's any newsroom, particularly in print, I would argue, and perhaps anywhere in Canada, that's most like the film Spotlight, it would be you guys.

You had a huge story last night about medical journals. It was on CTV National News as well. It sounds kind of mundane but it's a hugely important story. As somebody who used to do morning shows and health news, you would cite journals, and it immediately had an air of authority. We cite these journals all the time when we talk about health, which everybody pays attention to. You have a good investigative report on how they may be discredited through various takeovers. This is important stuff, but you're losing money, and I say that with despair. Don't get me wrong.

[John Honderich]

I appreciate your remarks and I thank you for them.

Toronto Star Touch set out to do exactly what you said, to establish, in effect, what La Presse had done in Montreal. We worked in close conjunction with them. The collaboration was absolutely extraordinary. When we started that, one argument was that this was something that would only work in Montreal with the French culture, with the French language, and so on.

We felt we could overcome that. I think it's been very successful. Apple rated our investigative reporting as its top digital news operation of 2015. Those stories you referred to are all there. We have three investigative stories on the front page. There's no one else who's doing this kind—

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

I agree.

[John Honderich]

But we've been cut by one-third.

In terms of Toronto Star Touch, the competition in the English market in Toronto is so great. People have so many options. I think the exclusivity of La Presse in Montreal gave it an added advantage. If you were to ask me—I'm going to volunteer this—who is our biggest newspaper competitor today, I would say it's the CBC. It's spending incredibly on its website—unlimited resources—and it's able to take advertising.

If you want to deal with an issue, you can look at the BBC model, where, in fact, they have exactly the same situation. They built up a huge digital presence, but the BBC is not allowed to take advertising. There's an issue for you to discuss.

You want to look at other options and you raised some of the issues about where to go. The Canadian periodical fund established after the Maclean's debacle, is a direct government subsidy for paid circulation magazines.

There's been a tradition that newspapers per se never wanted to get government subsidies. They never wanted to be involved. I can tell you that in Ontario there was a digital tax credit that the Province of Ontario brought in. They have now eliminated it. We certainly took that.

I can tell you that Premier McGuinty decided not to put the HST on the sale of newspapers because of the democracy argument. That's been in place, but there has never been anything full scale, like the support for the entertainment or creative industry across Canada.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you very much, Mr. Honderich.

We'll move to our second round of five minutes and turn it over to Mr. Waugh.

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

This is interesting because we've sat here for eight or nine months and blamed Facebook, Google, Apple, whatever. We have to find solutions. We bring out our report in February, and we have to find some solutions.

Print is not like digital, first of all. It's changed. Newspapers were back in the industrial age, if you don't mind me saying so. You probably took longer to transform than you should have, but now you've caught up. I can't spend $20,000 on that Ford full-page ad that I can get for digital, and that's the issue here. We have all talked about when Ford Canada buys a full page ad in the Toronto Star, they're probably paying $20,000 or $50,000 for that page.

[John Honderich]

I wish.

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

Yes, you wish. What is the price, then? That's a good point, John.

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

Hire him. He gets a good price.

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

What is the price of a full-page ad in the Toronto Star?

[John Honderich]

The answer to that is it depends. It depends on whether you're a regular buyer and the plan you might be under. There can be a whole series of plans, but it's not what it used to be.

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

Yes.

[John Honderich]

When it comes to advertising, there are now an infinite number of places where digital advertising can go. You had this whole thing—

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

That's okay.

[John Honderich]

It's absolutely okay. It's created this diffuse market. It used to be that we had a protected place. That's quite right. Now it's infinite and it's going elsewhere. That's the free market. That's where we're living, there's no question.

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

The free market is when you give former employees severance all across Canada—I see it—and then they open small newspapers, community newspapers. I have one in my city right now that's doing very well. It's called the Saskatoon Express. It has come from the National Post people who got severance pay. They've opened up a niche and people have gravitated to that.

Thank God, we have some competition in the newspaper business because over the years, as you know, you guys have spread out from Toronto. As Peter has said, you've gobbled up the little ones and now, of course, the little ones aren't as profitable as they once were.

[John Honderich]

I can tell you that one of your Saskatoon colleagues, Bill Peterson, set up a whole chain of small independent newspapers, and unfortunately he wasn't able to make it.

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

No, he went broke.

[John Honderich]

He went broke. He went at it for a while, but he wasn't able to carry it on. I watched that and I thought we might have given him some help.

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

Yes, maybe you did.

You made an interesting comment about “less quality investigative reporting”, and it was your first comment. Is that why I don't buy your newspaper? I get tired of seeing the same story in your newspaper and across the country. There's no bite to it, but you did mention there is the odd story.

That's my issue with the newspapers, and maybe on the French side you can talk about it. We do need some competition. We need some investigative reporting. You've taken many of your journalists and thrown them on TV. We see them every night. I wondered about that. Most of your columnists now are either on radio or TV.

[Martin Cauchon]

First, you've been speaking about competition. Of course, I do support competition, but we all agree that we support fair competition. When every day we have 200 journalists in the province of Quebec getting into our newspapers to not only try to produce but to succeed in producing fantastic local news, then every day we're paying for those people to make sure that we will maintain a good community life and maintain democracy. On the other side, you have people grabbing your news without paying any dues, and I believe that's unfair. That's all we're saying about that for the time being

Second, I think we're making a difference. As you said, people are getting into the digital world. Indeed they are, but we believe that the new business model that's ahead of us is what we call the multi-platform. You're going to take tablets, and you're going to take smart phones, and you're going to look at the Internet, as well, and you'll take print. They all get involved in what I call the ladder of advertising. They all have a specific role to play. Those that are getting involved in print have a certain target and a certain vision. For those that are getting involved in the tablet, as well, it's different. In the mind of consumers, they don't react the same, so that's why we've chosen the multi-platform.

We're just asking you to make sure that we're going to be able to turn around that business model and that again we're going to have great newspapers across Canada. That's all we want.

When it comes to advertising, I'm pleased with the mandate you received, and I know you're hearing people from across Canada. I look—and we mentioned this many times—at about 10 years ago when $20 million was invested in our newspapers. Today it's half a million dollars. Those dollars actually went away to people outside the country. They barely create jobs, and they barely create taxes, sir.

If you don't mind, I do believe that if you believe in your mandate, then you should walk the talk. We make the difference for a lot of businesses from across Canada that are putting their ads in our print and digital versions. I do believe that the Canadian government should be proud enough of our culture to stand and keep announcing that in our newspapers. That's what I believe, sir.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you.

We'll turn it over to Mr. Nantel.

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

Thank you very much. This is a very good debate and I am very pleased that we had it.

I think that we asked representatives from the lovely GAFA to come and meet with us so that they can measure the impact of their business on our system, which is stretched very tight. Unfortunately, our clerk has just left, but we will have to ask him why the people from Google, Facebook and those of their ilk are not here today. We certainly invited them, but they must have declined the invitation. If that's not so, they will let me know and they will change the research algorithm when people type my name into Google.

Mr. Cauchon, as we do not have a lot of time, could I ask you to answer as succinctly as you can?

[Martin Cauchon]

That will be difficult.

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

Mr. Cauchon, you acquired a host of newspapers. You surely knew that the model was changing. But things must have changed more quickly than you thought.

Is that correct?