How A Meeting Of “Press Barons” Shaped The Government’s News Bailout

A new book by Richard Stursberg reveals that the plan to offer a labour tax credit for news media has its origins in a Rogers-commissioned report, a dinner with Paul Godfrey, and research funded by industry players

When it comes to the federal government’s media bailout, there’s been a public debate, but also a debate pushed behind the scenes. A new book reveals a process driven by industry lobbying, in which Paul Godfrey and Richard Stursberg got together for dinner and set what would turn out to be much of the government’s final course.

In The Tangled Garden: A Canadian Cultural Manifesto for the Digital Age, former CBC head Stursberg lays out his vision for the future of Canadian media. Out this week from Lorimer, it’s a self-styled manifesto, that comes across as part Canadiana cri de cœur, part history of media policy, part insider memoir, and part hard-nosed business case for the media industry.

One particularly juicy tidbit involves a meeting near the end of 2016 of what Stursberg describes as a collection of Canadian “press barons,” gathered to discuss a plan he put together in a Rogers-funded research paper that had just been released. Commissioned by the media giant as part of then-heritage minister Mélanie Joly’s review of Canadian cultural policy, Cultural Policy for the Digital Age [pdf] made the case for a system of tax credits for the news media, similar to those for TV productions.

“It proposed a series of measures to rectify the problems [in the media industry]. These involved putting the FAANGs [Facebook, Apple, Amazon, Netflix, and Google] on the same footing in Canada as their Canadian competitors and providing subsidies to news operations in the same way that subsidies are provided to television production,” Stursberg writes of the report in his book.

Parts of the plan, modified and somewhat watered down, would end up forming the core of the federal government’s announced media bailout in the recent budget.

Another report released soon after was from the Public Policy Forum, titled The Shattered Mirror. Put together by Ed Greenspon, a former Globe and Mail editor-in-chief, it took a different approach than Stursberg’s, recommending the government put together a media fund that would give grants to news organizations engaged in so-called civic-focused journalism, as decided by a panel. When it debuted, that report made quite the public splash.

But what Stursberg’s plan lacked in wide publicity, it made up for in influence.

“In late 2016, [then Postmedia CEO] Paul Godfrey called me and said that the study I had prepared for Rogers had been brought to his attention, and that he was very interested in its idea of tax credits for news,” Stursberg writes. “He asked if I would have dinner with his board and explain my proposal.”

After the presentation went well, Godfrey agreed to gather a bunch of other media executives for a wider discussion. According to the book, that group included Torstar, Le Devoir, Transcontinental, Rogers Media, St. Joseph Communications, The Globe and Mail, and La Presse.

“It was a strange gathering. Many of the publishers and CEOs actively disliked each other. They all disliked Paul Godfrey, who they blamed for giving them a bad reputation in Ottawa,” Stursberg writes (emphasis in original). Postmedia’s cycles of layoffs and executive bonuses had not gone unnoticed elsewhere in media. “Nevertheless, they were all in his boardroom, eyeing one another suspiciously.”

As Stursberg tells Jesse Brown in an interview recorded for an upcoming episode of CANADALAND, the meeting brought together the heads of the traditional media. “The newspaper lobby guys were involved. You can’t cover off everybody, because otherwise you’d have to have a room of 300 people in it.”

Then Stursberg made his pitch to the group, which boiled down to the salaries for the actual producers of journalism — reporters, editors, photographers, and so on — qualifying for credits.

The gathered bigwigs liked the pitch enough to fund further research. “They also agreed to open their books, so that we could understand their costs and estimate the size of the draw that a tax credit would make on the national treasury,” Stursberg writes.

After completing the study, various major industry heads came together to make their pitch to federal government officials in April 2017. Joining the newspapers were representatives of the Canadian magazine industry.

“Although the magazines and newspapers preferred tax credits, they were happy to discuss the Public Policy Forum’s ideas as well. If the mandarins really hated tax credits, then better the fund than nothing,” Stursberg writes.

But the gathered bureaucrats weren’t interested in picking an approach at the meeting. As Stursberg writes, they had other concerns:

From the outset of the conversation, it became clear that they would not be drawn into a debate on the merits of the two approaches, let alone endorse one. Rather, they spent their time exploring issues that seemed a little marginal.

“Okay,” said a very senior mandarin. “But whatever form support might take, if any at all, it cannot be money for covering the Kardashians.”

“No. No. Not the Kardashians,” the others concurred.

The government finally announced its plan last month, in their last budget before the election. They took an approach that takes some aspects of each of the two major reports and weaves them together.

To qualify for the credit, applicants have to be approved by a board as a “Qualified Canadian Journalism Organization.” Because management salaries aren’t eligible for the subsidy, at least two of the employees have to be at arm’s length. (This means, essentially, you can’t be the owner of a startup and also count as a writer for the purpose of a tax credit.)

The government has set aside $75 million for the labour tax credit for media in the 2020-21 fiscal year, rising to $95 million for each of the next three years. Stursberg says the way the federal plan is backloaded is a way of inducing support from the country’s news outlets.

“I think it’s cynical. I think it says basically, to the media, ‘If you want to get to the big money, then you better make sure that we get reelected,'” he says in the CANADALAND interview.

There are further problems, in Stursberg’s view. In his interview with Brown, he says half-measures aren’t going to work.

“The only way my plan works in terms of tax credits is they have to be uncapped, which means that whatever the draw is that year is the draw,” Stursberg says in the interview. “The way they’ve got it set up now, the tax credits appear to be capped. And they’re going to set up a committee — which I also dislike — that’s going to decide who actually qualifies and what kinds of things are going to qualify.”

Erin Millar publishes The Discourse, an online news startup focused on community reporting. It’s a member-focused organization, that relies on a mix of investment capital and crowdfunding. They report from Cowichan Valley on Vancouver Island, the Toronto suburb of Scarborough, and B.C.’s Lower Mainland where they focus on Indigenous people living off-reserve.

It’s not exactly the type of outlet included in Big Newspaper’s lobbying efforts.

To her eyes, the plan laid out by the feds is one that makes getting a news startup off the ground almost impossible. “If I look at this package, it actually would have made it harder for me to get here, if it existed five years ago,” Millar says.

Millar worries that too many digital outlets are just going to give up.

“I mean, I don’t know how to lobby the government, we’re just kind of doing this off the side of our desk,” Millar says.

In a post on The Discourse, Millar explains what they told finance department officials in a March meeting: “The policy distorts the playing field by subsidizing established players (primarily newspapers) to compete directly with new entrants before these startups have an opportunity to grow to a size where they qualify for the same subsidization.”

Since that meeting, Millar and her team have created a Google Doc of a draft memo they plan to present to the department with recommendations to make the policy friendlier to startups. They want input from the crowd to make sure they get as full a picture of what’s out there as possible. (Upon Millar’s invitation, Canadaland submitted comments.)

“The alternative voices in this can’t just sit back and wait for phone calls from the government, because that’s just not how the system works,” Millar says. “The system is driven by lobbyists.”

In his interview with CANADALAND, Stursberg is pushed on this point, that the process is driven by lobbying efforts. On this point, he and Millar are in accord.

“But this is the nature of government itself,” Stursberg says.



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