Canadian Heritage Committee on Nov. 17th, 2016

[Ken Waddell]

What are we doing? We are very local.

Just to give you a couple of examples, if somebody comes through the door from the Rotary Club and says they'd like a deal on the ads for the Rotary Club auction, we say that's fine, it's 50%. It's a charitable organization, so it's 50%. They may or may not have the power to do that. In that particular case, they offered it to them for free. They came back and said they couldn't afford to pay us. I told them to go there, because that's the place to buy it. It's for free.

They were discounting ads. They were erratic in their rate card. They were very erratic in the people they hired, and they gave them no guidance. Good people were left to go adrift, so the reporting was worse than ours—if that's possible.

[Voices]

Oh, oh!

[Ken Waddell]

Anyway, generally the community abandoned them because the community was not being served. They didn't have a publisher; they just had an office manager. They didn't have the local input.

In the places where they do have the local input or a locally based person with locally based authority to make those decisions, they do not too badly. I mentioned how a locally owned, vested interest in the community is, in my opinion, the only model that will ever get us through this. It is the only model that has ever worked with a family-owned operation for over 100 years, as Mr. Lever said.

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

In closing, I appreciate what you just said, because it makes me think of how a bank lends money. They want to lend money to the people who live in the community because they know the chances of success are much greater because they're not leaving.

I'll finish on that note. Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you.

Mr. Maguire, for the Conservatives, you have seven minutes, please.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Madam Chair.

Thank you to the presenters today for being here to make your comments. I appreciate the frankness of all the presenters today. I've known Mr. Waddell from Manitoba for a number of years, and expect frankness from him. My colleagues have seen that today. It's what we need, quite frankly, in this committee.

Ken, there are a number of areas where I would like to ask you a question, and others can answer too. I think you've answered the part about why you were successful in your operation and why you've done it. The local reporting is so important. Being accurate on the ground and when it's in print, as you said in your presentation, is more accountable. Can you elaborate any more around the facts-based part of it?

I also want to know who your major competitors are. Several of you, your other colleagues here, have outlined in the presentation today the competition you're faced with from the CBC. A lot of money is going to that area. I may want a comment or two from you as to whether the committee should be looking at reviewing the mandate of the CBC, as an example.

More importantly, I just want to know more about the approach you've used to be successful in your areas. Could you lead off, Ken, please?

[Ken Waddell]

Just to follow up on the earlier question, at the time we took over the other newspaper we had eight staff, and theirs was down to three. I'm talking about boots on the ground; I'm talking about a local commitment. Certainly I would have made more money if I had cut back to three staff, because you could limp along and make it happen for a while. I'm 68 years old. I don't have to limp along and make it happen for much longer, but I don't ever intend to retire, so I am in it for the long haul, whether that long haul be two years or 20 more years.

Our major competition actually is flyers that go through Canada Post. Canada Post is in the unique position whereby it is our supplier for at least part of our circulation—over half. We're in the stores and drop boxes and that sort of thing for part of our circulation, but it is our supplier and our competition. I've long felt that Canada Post cross-subsidizes from their first-class mail to subsidize its unaddressed ad mail. I don't think that's fair.

Also, it's very unfair that three-quarters of a billion dollars, and I've heard as high as a billion dollars, goes into CBC. I wouldn't mind the government's buying a billion dollars' worth of advertising from CBC, but I don't see why we should be giving it a grant of a billion dollars.

The former publications assistance program, also now known as the Canadian periodical fund, in the last figures I heard, is $75 million. That $75 million is spread out over 1,300 publications across Canada, and a billion dollars—or three-quarters of a billion dollars, if you want to use the lower figure—goes to the CBC. That is absolutely ludicrous.

If you wonder why government isn't able to help publications by buying ads—these are not grants, in my opinion—that is where your money is going.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Casey, do you have something to add to that?

[Casey Lessard]

Ken has mentioned something interesting; we were discussing this before.

How much of that Canadian periodical fund do you see?

[Ken Waddell]

None.

[Casey Lessard]

Right; that's because he does free distribution. We are paid distribution, so we get funding to offset the costs of that distribution through the Canadian periodical fund.

The trend tends to be towards free models, whereby people are getting the paper for free—Metro, or in the smaller communities it happens quite a bit too—but there's no opportunity to tap into any sort of backstop or assistance to get such a program off the ground.

If you wanted to do a full distribution paper, for example, in a territory in which 85% of the people maybe cannot afford even to buy a newspaper, we can't get going the model of giving everybody a free paper to get the information that would help them find a job, etc.

One of our main competitors is CBC, which is on the radio in every community in Nunavut; otherwise, we're the only ones on the ground. They can watch TV. APTN is pretty well watched, as there is an office there, and obviously whatever else is on cable, but the real competition is CBC and Facebook, which people tend to be using for free, getting their information for free. Although Facebook is not necessarily competing in Nunavut for those dollars, the Nunavut government is certainly spending money on Facebook advertising instead of spending that money with us. That is a good example.

I don't know whether Bruce may have anything to add to that.

[The Chair, Liberal, Hedy Fry]

Bert, do you have...?

[Bert Crowfoot]

Over the 39 years that I've been involved, we went from advertising to seeing the government put their advertising elsewhere. We used to publish 25,000, and the cost to mail it.... We finally switched to digital. As you may have noticed, everybody is getting their news that way now rather than from something in front of them. That's the way the future is; that's the way it's headed.

We've quit publishing a hard copy newspaper. We've had one of the digital copies that you could flip, but it's hard to read, so we're in the process of making changes to our publication.

On the radio side, we're doing fine. Advertising is still an issue.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thanks.

One of the major newspapers in Canada indicated to us at this committee that its major competitor was the CBC; it wasn't another newspaper. I appreciate, then, the comments you've made.

Mr. Lever, I believe it was you who commented that the CBC is an interrupter. Can you elaborate on that and maybe comment on whether you think it should have its mandate reviewed?

Then, if there's any time left.... Ken, you made the comment in your presentation that the paper is still a credible means. In local areas, I still find that people read the newspaper, so just give us a comment—

[The Chair, Liberal, Hedy Fry]

You have 10 seconds left, Mr. Maguire, so I ask that the answer be as crisp as it possibly can be.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you.

[Mark Lever]

Sorry, the question, I think, to me was about the CBC.

The CBC is a tremendous Canadian institution, but the government has to decide whether it can compete for our advertising dollars in the digital space and aggregate our content, or whether it's going to be a completely publicly funded entity. It seems to be a hybrid model, so it's increasing funding from government sources while skimming advertising dollars. Due to the national network capability of the CBC, we've seen attrition in our digital advertising spend. They're a competitor not only for eyeballs but also for ad dollars, which are diminishing.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Waddell.

[Ken Waddell]

If the CBC is going to be allowed to skim off advertising dollars in the so-called web market, that is totally unfair. They're into our territory or into other...even the people who don't have a newspaper but who have a website, a news aggregator. I think that's totally unfair.

You probably know my views on it. I think it is a great Canadian institution. I think it should be sold.

[Casey Lessard]

If I could say one last thing, if you were to stop funding the CBC in Nunavut, I think it would be a negative. In most of the communities.... It's weird to say that, as we sort of view it as a competitor, as well. If you were to eliminate the CBC funding, or move it to an advertising model, then it wouldn't exist in Nunavut. I think that would be a detriment.

[Ken Waddell]

Could I just add that I agree with—

[The Chair, Liberal, Hedy Fry]

No, I'm sorry. We've gone well over the seven minutes allotted for this round.

Thank you.

Mr. Nantel. Maybe you can see what you can do to encourage the continuity of this question.

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

Thank you, Madam Chair.

I want to thank all the witnesses. I will address Mr. Crowfoot.

I'll speak in English.

I'm going to ask if it's possible for you to send your text. I know it should be in both languages. I'm sure we can manage. I'm sure what you had to say was precious, so please send it.

I congratulate you on the initiatives you've been doing for all these years and for your courage in these challenging times of the paradigm shifting completely to new technologies. We could talk forever about broadband Internet, whether it's available or not, and your getting ready to roll on this and then having all this competition coming from the digital side.

I'm switching to Mr. Lever. You talked about the importance of the CBC and Radio-Canada websites grabbing part of your advertising sales on digital, and it's true. It's been mentioned quite a few times for newspapers, because it's very good journalistic work. It's also why people refer to it a lot. We've heard many times that they should not have advertising. They can complement their work with that, but they should not sell advertising.

Is it right when you say 88% of the advertising online goes to international, and you're fighting with the CBC for that very thin 12% that's remaining? The dramatic change is not there. The dramatic change is to make sure you get your fair share of advertising with the readers you have and the viewers you have. The big change is that 88% of advertising sales goes to the States. Is it okay to say so, Mr. Lever?

[Mark Lever]

I would agree with your assessment completely. There's 12% up for grabs. We're competing with the CBC and other outlets for that 12%, but 88%, including government spending, is going to Facebook, Google, and other search and social media sites.

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

Thank you.

Although I appreciate this truth being said, I don't want us to go crazy about this. This is something we can control easily. We can, obviously, agree to disagree on what the CBC is good or bad at. This is an issue that's been raised, that they were grabbing the advertising dollars in the online world.

Okay, but we have 88% to try to get back, or to try to help you get your share.

What would you suggest, Mr. Waddell?