Canadian Heritage Committee on Sept. 29th, 2016

[The Vice-Chair, Conservative, Larry Maguire]

Yes, you just don't want to read your own.

[John Honderich]

—still to our great financial satisfaction.

[The Vice-Chair, Conservative, Larry Maguire]

Having said that, we'll move right along to La Coalition pour la pérennité de la presse d’information au Québec. I'd like to introduce our guests today and presenters, Martin Cauchon, Brian Myles, and Pierre-Paul Noreau.

Welcome, gentlemen, and I'll the next 10 minutes over to you.

[Martin Cauchon, Executive Chairman, Groupe Capitales Médias, La Coalition pour la pérennité de la presse d’information au Québec]

Thank you very much.

Mr. Chair, Mr. Parliamentary Secretary and members of the committee, it's a pleasure to be here today. It's also a pleasure because we consider the mandate entrusted to you as a lifeline. It's a mandate we welcome, obviously, and one we want to take part in. As has been mentioned several times, all the media throughout Canada—it's the same almost everywhere in the world—are in what is being called a “perfect storm” that is basically requiring that a new business model be implemented.

Today two of us will speak. Brian Myles, who is with me, represents Le Devoir. He's the director and publisher of Le Devoir. Also with us today is Pierre-Paul Noreau, president and publisher of Le Droit. We represent the Coalition pour la pérennité de la presse d'information au Québec.

Basically, the coalition is comprised of four major players in the Canadian newspaper industry: Groupe Capitales Médias, of which I am the executive chairman, Le Devoir, Hebdos Québec and TC Transcontinental, whose representatives testified before you here, a little earlier in the spring.

Coalition members publish 146 daily and weekly newspapers that, each week, reach nearly six million Quebecers or nearly 80% of the population. The coalition also represents newspapers in Atlantic Canada, Ontario and Saskatchewan. All of our members combined provide good jobs to more than 2,500 Canadians.

We are here today to sound the alarm and ask that we have a national discussion together on print media. It's a matter of democracy. As for the current situation of newspapers, in our case and in the case of all coalition members, readership is growing.

The first observation is that there is a need and a demand for all our products. It's important to ensure that, in Canada, we can work with professional journalists to continue to produce information that reflects the community, local information and quality information.

For a few years now, we haven't been sitting back as a coalition. We have already started to put in place certain modifications in our business models. Take the Groupe Capitales Médias, for instance; our information can now be found on many digital platforms.

Competition is fierce. It comes from all over the world, especially from giants like Google. When we talk about an intervention, which would be limited, of course, we must talk about information protection and copyright protection.

Essentially, we are asking you today to join us in transforming a business model that is already under way. However, as Mr. Honderich mentioned earlier, the findings are quite impressive. In my opinion, when I see the demand and growth in readership, I think that there will always be a place for good, quality information.

As for what we are asking you to consider, we have a number of recommendations. I will ask my colleague, Brian Myles to explain the various recommendations to you.

Thank you.

[Brian Myles, Editor, Director, Le Devoir, La Coalition pour la pérennité de la presse d’information au Québec]

Ladies and gentlemen, thank you. It's a real pleasure to be here before you today.

As my colleagues said earlier, the situation is serious. I think that, if given the opportunity, every media owner would tell you pretty much the same thing today, which is that our traditional revenue from print is decreasing and digital revenue isn't offsetting the losses. Let me be clear: I wouldn't go back to the paper era. We aren't dinosaurs here. The digital revolution is fantastic, but for our business model, it means that we have traded analogue dollars for digital cents. We are failing to achieve a stable business model.

Our recommendations are in two parts: measures that provide direct assistance and measures that provide indirect assistance. The first, which is perhaps the most important, is an indirect measure. If the government can't help us, it could stop hurting us and use the advertising budgets at its disposal to fund our media, the national media of Quebec and of the rest of Canada.

The federal government currently invests about half a million dollars in its advertising in Canadian newspapers. Ten years ago, that amount was $20 million. For us, that drop from $20 million to half a million dollars is brutal.

Where has all the government advertising gone?

It's no big mystery. In fact, the investment in 2014-15 in digital platforms was some $19 million. That $19 million or, if we round up, that $20 million is basically money inherited by American giants like Google and Facebook.

So the first recommendation is, of course, to make a significant and lasting increase to government advertising investment in our media. In addition, we think advertisers who are still brave enough to support the press here should benefit from tax credits for their advertising investment in our platforms. When I say “platforms”, that includes our printed pages, but also our screens, as we can now all be found on tablets and cell phones.

It would also be very important to update the Copyright Act. European countries are ahead of Canada and the United States on this. Here, we have let this entity called GAFA, or the giants Google, Amazon, Facebook and Apple, bleed our content dry and monetize it. It's an exodus of revenue, a major fiscal exodus. Improving the Copyright Act would make it possible to negotiate agreements and obtain royalties when our content is used on these major platforms.

We are also asking to be treated like all other media. These days, in the digital world, a screen is a screen. We need to consider that print media on digital platforms will also sometimes have a video and be on the Internet. For now, we don't have access to any assistance programs. Programs managed by the Canada Media Fund and Telefilm Canada aren't available to us. If we want to develop a video offering on our mobile site to reach new clients, young people, we have to pay for it ourselves. We don't have access to any tax credits, any assistance, direct or indirect. That the case for Le Devoir and all coalition members at the moment.

We think that payroll tax credits for hiring qualified journalists, and tax credits for creating applications would enable us to continue our digital shift. We don't expect ongoing assistance from the government. We aren't asking to be dependent on it. We think that transitional help would let us continue the activities we've already started and to pay journalists. In fact, information has a price, a value. But this value is that of brains, the intelligence of the people we hire and who are in the field to bring back quality material. These credits would certainly give us some breathing room, some time to get our business models in place.

Lastly, we pay GST on our products and QST in Quebec. We are asking both levels of government, Quebec City and Ottawa, to coordinate to exempt print media from the GST and QST. Of course, this measure would alleviate the problem a little. You can see for yourselves and around you that in the cultural arena, freebies are widespread, particularly among new information consumers. There are limits to what we can charge for subscriptions. We have a pay wall at Le Devoir.

We are one of the rare media that is successful in having our subscribers pay for quality information. We are well aware that we are stretching their flexibility to the limit by constantly increasing prices. A tax exemption would give us some manoeuvring room. The book industry in Quebec is exempt from the QST. Canadian magazines benefit from tax exemptions and have had access to the Canada Periodical Fund.

[The Vice-Chair, Conservative, Larry Maguire]

There's one minute left.

[Brian Myles]

In a word, in the cultural or media industries, we note that all sectors have been assisted, with two exceptions. They are private radio—with public radio funded by the state—and the print media. We note that the per capita assistance to the print media is $3 in Quebec and less than $2 in Canada. In the United States, it is double, which is no small thing because that is the non-interventionist country par excellence. The countries with the most assistance provide up to $80 per capita. We are not asking to get to the Scandinavian level overnight, but we feel that Quebec City and Ottawa must do more to support the media that are essential for the vitality of our democracy.

Thank you.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you very much for your presentation. Our time is up there.

I failed to inform you that the seven-minute question periods include the answers.

We'll move along and begin the questioning with Mr. Samson.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Thank you very much, Mr. Chair.

I'm not used to starting off, but I appreciate the gesture.

Mr. Cauchon, the members of your group and yourself have put forward a lot of solutions and I appreciate that greatly. We are here to find solutions.

Mr. Honderich and the two witnesses have clearly shown that we are going through a crisis and that is very important for us to take considered measures. I want to comment quickly on the five points that Mr. Myles raised.

The first point is about indirect assistance through government investments in newspaper advertising. The value has gone from $20 million to half a million dollars. I am not sure that there is an easy solution. I would not want our government to invest $10 million simply to keep newspapers alive. To be honest with you, I am not very comfortable with that. However, I am interested in your point about tax credits for those who place advertisements in newspapers. That has been mentioned as a strategy on a number of occasions, advertisers who would benefit from a tax credit of that kind could be more motivated to place advertisements in newspapers.

As I said, I am somewhat against your first point because fewer and fewer people are getting their information from newspapers. The video suggestion interests me as well. Points 2, 3 and 4 seem interesting. Point 5 also appears very interesting because we still have to distinguish between large newspapers and large media outlets and the smaller ones. Our study is principally about rural communities. The committee wants to find out what information is available in rural communities. In my opinion, the suggestions in points 2, 3, 4 and 5 are interesting if we want to support the print media, either by exempting them from the GST and the QST, by providing financial assistance for video production, or by granting tax credits to advertisers.

I see all those as possible tools and solutions in rural areas and smaller regions to ensure that the people there have access to good information. What I would like is to find strategies designed to help communicate important Canadian and local content to rural regions. I am ready to put money into that, but less so in urban areas where you certainly have huge resources available.

With that, I await your comments.

[Martin Cauchon]

Thank you very much, Mr. Chair.

Thank you for that question, sir.

Let us go back to the first comment you made about the $20 million in government advertising that today stands at $495,000. It must be understood that we are not asking for an additional advertising budget. We understand that the overall amount invested each year is $20 million.

Essentially, we are saying to the Canadian government that, if it is sensitive in the area of local news, as you have just mentioned, it should continue to invest in our products.

Every day, in all groups, in all newspapers and coalition members, we meet people who, day after day, invest in our newspapers and buy advertising in them because they understand that we can help them to improve their sales and that we are partners. We also deliver results.

For several years, we have been moving from a paper platform to what is called the digital universe. We now deal with what we call multimedia. Essentially, we are telling you that something has to be done to help us, because the situation is completely unfair.

A little earlier, Brian Myles spoke about the assistance given to television. There was the debate about magazines; don’t forget that I was there at the time. That was done correctly, in order to protect democracy, to maintain journalistic quality everywhere in Canada, and to ensure Canadian content.

I said that the situation is unfair. In fact, every day, if you take the members of my group, Groupe Capitales Médias, for example, 200 reporters cover the news professionally all over Quebec. This is quality news about the communities. Those newspapers reflect the life of the community, culturally, politically and economically. We do it with our own capacity and our own financial resources, and with very generous people. They do it almost on a volunteer basis, because they believe in their mission.

Then, we see the Googles of this world, essentially stealing, distributing and broadcasting the information through the entire platform without it costing them a penny.

So we have come up with a number of recommendations. I feel that the Government of Canada should stop talking and start doing something.

In addition, I feel that we should be dusting off the Copyright Act, as they are in the process of doing in Europe.

When the government decides to deal with the copyright issue, when it tells the American giants to stop stealing our information and to pay us for it, you will see a change in the tone of the American giants and major companies. They will come and sit down with us, because they would not like to have a business model imposed on them.

So that is what we are asking you for.

Again, Mr. Vice-Chair, we're very glad to be here today, to be around this table and to support the mandate you have. I do believe it's a question of democracy. As you said, we're talking about regions across Canada, and it's key. If I decided to move on in my life and get involved in the media business knowing that the business model is going through a major transition in a period of time that's difficult for the media, it's because I believe in the information. I believe as well in the question of the quality of the information, and I believe and I know that we're making a difference in all the communities across Canada. That's the reason I'm here today.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

I'm glad I asked a question, because he got a lot out.

[The Vice-Chair, Conservative, Larry Maguire]

You have another 30 seconds.

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

Go for it.

[Martin Cauchon]

If there is some time left, I can keep going.

[The Vice-Chair, Conservative, Larry Maguire]

There will be another opportunity.

I'd like to go to Mr. Van Loan.

[Peter Van Loan, Conservative, York—Simcoe, ON]

First, I have some questions for Mr. Honderich.

In my constituency, we have three Metroland newspapers in the York Region news group: Georgina Advocate, East Gwillimbury Express, and the Bradford West Gwillimbury Topic. Yet almost all of them are often too indistinguishable from the Newmarket Era banner. You say there are these forces creating a separation of your newspapers from the community or an inability to connect. I'd argue that perhaps your own editorial or your own business model is a big part of that.

When people from Pefferlaw are wondering what the heck does what went on at Aurora town council this week have to do with them, they're reading newspapers that aren't really about their community but about other communities.

[John Honderich]

You make my point. I understand exactly what you're saying, and I know about those papers.

As I pointed out, on the community newspaper side, we have now reduced the number of reporters by 38%.

[Peter Van Loan, Conservative, York—Simcoe, ON]

This is not new. For years your local editors have gone around having to apologize in the community, in an embarrassed fashion, saying, “Sorry the article didn't appear. I don't have editorial control. The decisions are being made down in Newmarket and Aurora. I don't know why we have an article about something that happened in Aurora and the stuff about Georgina didn't appear.”

They've been doing that for years. It's not new. It's not with the recent reductions in staff. It's one of the most embarrassing things about being a Metroland editor up in my communities.

[John Honderich]

I know there has been a centralization of some of the bureaus and some of those papers. I can take up the particular concerns you raise, but I know this is what's been happening as you reduce reporting, and this is not going on just suddenly. This reduction has taken place over a 10-year period. Where in fact you might have been able to afford a reporter to go to Pefferlaw and to go to each one of those communities you mentioned and report on all those councils today, we aren't. We make decisions. What we do is we bring papers together, and we bring editorial content together. You're seeing this phenomenon unfold across the country where, in fact, if we had more reporters, we could have more local content. Now they bring it together and, you're right, you have Aurora in Pefferlaw or in Barrie simply because that's the most efficient way to do it and what our resources will allow.

I don't like it any better than you do.

[Peter Van Loan, Conservative, York—Simcoe, ON]

It's not a resource issue when a local editor says, “Sorry. The article I wrote didn't run because they chose to run something else.” That's what's been going on for years, and that's what they have to say.

Another example is, community groups will often come and say they have a notice that there's a church supper coming up or a charity garage sale, and they're told, “Well, we won't run your notice unless you buy an ad.” That's also been going on for years.

[John Honderich]

Well, that's not a practice I would condone.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Well, it's been a practice of your newspapers regularly over the years.

With the staff turnover you talk about, and there has certainly been a lot of that, one almost gets the sense that in your local newspapers someone from somewhere else is trying to tell you about your community and that they don't really understand it. We don't see these same phenomena in the local Quebecor papers or in the local independent paper.

It's not a resource issue. You have way more resources, way more advertising, and way more flyers than those other local papers, Quebecor or independent, which are effectively reporting. I'm putting it to you that it's your model. Perhaps, as some say, it's because the locals are being used to subsidize the Toronto Star. Is it perhaps not your business model to maintain the Toronto Star that is actually harming and causing the loss of local coverage in all these other communities?

[John Honderich]

First of all, I would stack up our community papers against the Quebecor papers any day.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Not in my riding, you wouldn't.

[John Honderich]

Well, I can tell you that in terms of awards and looking at how they're doing, I would stack them up any day.

Clearly there has been a greater centralization in the community paper market because of these declines in resources. The decisions aren't made in Toronto. Metroland, which runs the community papers, is a separate company within the Torstar group. The decisions are not made by anyone at the Toronto Star. It runs itself. In fact, it's more profitable, far more profitable than the Toronto Star, exactly because of the attachment to community and the flyers.