Canadian Heritage Committee on Feb. 23rd, 2016

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

Okay, then was there any specific mention of how you are dealing with local and regional media in relation to the minister's mandate letter?

[Jean-François Bernier]

Here again I would have to decline to answer that question, Madam Chair.

[The Chair, Liberal, Hedy Fry]

I think that question might be best asked of the minister.

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

Well, I guess I'm looking at the kinds of recommendations the Department of Canadian Heritage would put forward.

You've given us a very good overview of some of the advertising revenues. Certainly, Internet has taken off and classifieds are going down, but it looks as though the revenues from community newspapers have stayed pretty much the same. In fact, last year, in 2013—not last year now, but these numbers go to 2014—in your graph on page 9 they are virtually the same as they were in 2005.

I'm asking these questions so that we can get a handle on how to look at what is expected and what we will see coming down the road for the small or medium media to get out to the rural and local areas, the more remote areas that our study is looking at, and how we can best assess this situation. That's why I'm trying to get a handle on.... It will come out in future discussions, but in this meeting I was asking these questions so that we can get a handle as committee members on exactly what recommendations we can make as a committee to go forward to the government, recommendations that you will be dealing with. It helps if we can know a bit more detail about what kinds of recommendations have been requested of you—excluding those involving the CBC; I understand that it's one of the larger mechanisms of media, and so I'm dealing more with the smaller ones.

Will you be looking at making changes in some of the programs currently being provided? Has the department received from private media any recommendations on those areas as well?

[Jean-François Bernier]

In answer to your question, the Canada periodical fund was evaluated in 2015. The evaluation recommendations and the management response to this recommendation are available online, and we could flip that material to the clerk of the committee. We are looking at the recommendations and are going to be adapting the program when and where it's required.

That would be the essence of my answer to your question.

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

Okay, thanks. We would appreciate it, if you could provide that.

With regard to governments funds, you were talking about programming, in the graphs and the charts, for both the sides here, and I appreciate the information that is there. But there are incentives, and I wondered what incentives.... Obviously we'd like to see the funding recipients who are there already be able to increase their viewership and readership, on both sides of the media here, and become self-sustaining, if they could.

I'm wondering, with respect to what government funds are available, what incentives these individual sectors receive to help them become more self-sustaining.

[Jean-François Bernier]

I could speak for newspapers and some TV production.

In newspapers, there's the Canada periodical fund for periodicals. It is what it is: $75 million. As I mentioned, this is the contribution for community newspapers and magazine publishers.

In the audiovisual area, you have a fairly elaborate public policy tool kit, which includes tax credits based on labour expenses for independent producers. You have the Canada Media Fund, which is a public-private partnership. Lawyers perhaps would correct me, because it's not per se with a partner, but it is a public-private partnership. There's Telefilm Canada, which invests just about $100 million in the production of feature films in this country. There's the National Film Board, which supports in-house production. There's the CBC, which sponsors or licenses Canadian programming. And there is a slate of licence conditions that the CRTC puts on various players in the broadcasting sector, from quotas to spending amounts and requirements in Canadian programming.

When you add all this up, it's a lot of money, but it is for the production of Canadian content, and there have been many successes with many of those programs, not only in Canada but in the rest of the world. If you want to watch the next Oscars ceremony, you'll see that two Canadian co-productions are in the running for best picture. So I would say we've come a long way.

I don't know, Helen, whether you want to add anything else.

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

Thank you.

Did I understand that the $75 million you talked about was for newspapers?

[Jean-François Bernier]

It's for magazines and newspapers—Maclean's and La Liberté and community newspapers, not dailies. I want to insist on that, because there are no public funds going to the National Post, or The Globe and Mail, or Le Journal de Montréal.

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

No, that's for sure, and that's very clear in your presentation.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Maguire. I think we've gone just a bit over seven minutes.

Mr. Nantel, you may take seven minutes, please.

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

Thank you, Madam Chair.

Good morning everyone.

We are going to hear from all of you in the next little while. We have quite a bit of expertise around the table. We appreciate your taking the time to provide us with guidance as part of our study.

We could no doubt spend three days discussing all the information you shared with us this morning, but we'll spend just a few minutes on it today. Committee members need to read, assimilate and understand all of it. It's not simply a matter of asking questions and wrapping things up.

Canada has long been grappling with the reality of two official languages and minority language communities. That is not where the paradigm shifted. The paradigm shift has to do with the media concentration and, above all, the drop in advertising revenue, which shows no sign of stopping. That's what I took away from your charts and graphs. Would you agree that it's a major problem?

[Jean-François Bernier]

Yes.

The advertising pie is growing, but the bulk of the revenue is spent on online advertising. Advertisers are buying space on Google News and other news platforms that aren't necessarily Canadian. That's the external reality. And it's happening, to a lesser extent, at the expense of community newspapers but, to a large extent, at the expense of dailies. Advertising has been the main source of revenue for the print media ever since it came into existence.

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

Of course.

Not only was it the main source of revenue, but it was also a source of local relevance. For instance, one of the reasons I check my local weekly paper is to see who charges the best price to change my winter tires and which local garage can offer me that service. It may sound naive or innocent, but that's the kind of information you can find in your local paper. What happened? Today, the news component is there, of course, but news without compensation for journalists doesn't exist. So advertising is really what it comes down to.

[Jean-François Bernier]

I'd like to answer your questions through two lenses.

First, our figures show that community newspapers experienced a drop—

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

Community newspapers.

[Jean-François Bernier]

Yes.

Community newspapers experienced a less significant drop in revenue than daily newspapers did. So there is the proof that, locally, the demand exists for a hardware store to place its ad in a printed paper—and you can attest to that. That is where small business at the local level turns when it wants to advertise and reach the public.

I already mentioned this, but it bears repeating. Global News is competing with CNN, but local new sources in Amos or Longueuil, say, aren't affected. CNN doesn't give people information on tire services in Longueuil.

There is tremendous competition from new information sources, and they are frankly very effective.

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

We recently talked to people in the industry, who said that 80% of new spending on online advertising by ad agencies went to search engines such as Google and Yahoo. That's money that's flowing directly out of the country, that isn't benefiting any of our own media services, that isn't creating jobs, and that is undermining our cultural heritage.

Let's consider the La Presse+ app model. Clearly, those who are putting their money there know what they're doing. When you read La Presse+, you see that the ads really stand out. They are interactive colour ads, and so forth.

Have you ever looked into the support that could be provided to our media services to build apps? An app provides direct access to that media source, without having to go through a search engine. And that makes all the difference.

To find out what's happening in my local news, I google “Hamilton” whatever. At the top of the page, I see the Google ads. I click on a link, and my eyes ultimately land on a media site that is displaying an advertiser's ad. Do you see what I mean? Aren't apps a way around that? La Presse's business model clearly seems to be working or, at the very least, appears quite promising.

[Jean-François Bernier]

Again, I'm going to answer your question through two lenses.

In terms of app development, that's an eligible expense for periodicals receiving support under the Canada periodical fund. In the past, public programs provided funding to cover mailing costs. So instead of costing you $150 to receive your subscription of L'actualité, it cost you only $40 because the postage was subsidized. That was prior to 2010, before the new program was created.

Now, the fund is organized in such a way that the publisher can choose whether to invest in content or an app; the publisher can decide where the money would be best spent. That's the first thing.

The second thing is that there's a major difference between La Presse publisher Gesca and a community newspaper like La Liberté. You will see that if you meet with those people. The economies of scale and impact are not the same.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Now we have Ms. Dabrusin, for seven minutes.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

I would like to ask a few more questions based on...we're talking about media concentration, and we've talked about the number of owners. Have there been any studies on the impact of that concentration on the diversity of voices being heard?

Mr. Bernier might be....

[Jean-François Bernier]

Not that I'm aware of. I'm sure that some academics and universities.... I must say that for the Department of Canadian Heritage, the newspaper industry has not been our bread and butter. We're more with community newspapers.

This is not an area that we'd follow, with policy analysts looking...that's why....

Honestly, it must exist somewhere.

[Helen Kennedy]

From a broadcasting perspective, I would encourage the committee to ask the CRTC about its examination of the question of diversity in the media throughout its regulatory processes.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

I had looked at the diversity of all those policies; that was part of my interest.

Over the weekend we saw quite a bit of discussion coming out of a BuzzFeed Canada post, which requested content from non-white and non-male providers.

I was curious. That's in the digital media perspective, and I see that we have someone here in digital from Canadian Heritage. Is any type of analysis available right now as to the diversity of voices? Is there a need to help promote within our industries more of those groups of people: non-white, non-male voices?

[Jean-François Bernier]

Again, I'm not aware of any such analysis or study.