The news that Canada’s third most read newspaper, French-language daily La Presse, would be severing ties with the powerful Desmarais family, and becoming a not-for-profit charitable entity, had everyone talking Tuesday morning. Quebecers wondered what this all meant for the 130-year-old paper’s long-term viability, while everyone working in media inevitably pondered whether this new proposed business model would prove to be successful or the beginning of the end for the popular daily.

During a press conference, La Presse president, Pierre-Elliott Levasseur, and publisher, Guy Crevier presented the new structure and vision for the future and announced La Presse's intention to adopt a not for profit structure that will benefit from a financial contribution of $50 million from Power Corporation, the current owner. The Desmarais family has owned La Presse since 1967.

"The question remains: can [La Presse] have their cake and eat it too? Can they be both a non-profit and continue to behave like they’re competing for ad dollars? It’s uncharted territory." #Quebec

This change in structure would require the repeal of a provision of a Private Act adopted in 1967 regarding the ownership of La Presse. When that happens, Power Corporation will no longer own La Presse and will no longer have any ties with the not-for-profit structure. The intent is to, then, establish a social trust and the trust deed will be made public at that time. Levasseur said that there are no plans for a paywall and that content will remain free. No layoffs are expected to take place as part of the change and pensions will be honoured under the new structure.

“Once the new structure is established, all profit from operations, any government assistance and money collected from donors will serve the operations of La Presse, with the ultimate goal of producing high-quality news reporting for the public at large,” said the press release.

The goal is to, ultimately, expand the newspaper’s support base, from the federal government, to major charitable donors, foundations, advertisers and the general public. La Presse believes that $3 million in yearly donations is feasible and will allow it to pursue its mandate of producing high-quality and reliable news.

Levasseur justified the decision by explaining that Facebook and Google currently monopolize nearly 80 per cent of digital advertising revenue in Canada and urged the federal government to act on its intention, expressed in the last budget, to financially support the written press through philanthropic models, as well as through direct assistance.

He also made it clear during the press conference that it was imperative they present a new business model because “there isn’t a single donor or person in the community who will hand over money to La Presse while it’s owned by Power Corporation.”

In other words, the company is now calling the government’s bluff, hoping there’s a better chance it can get federal bailout money now that it’s become a not-for-profit business, since the odds were next to nil that it would be able to do so while being owned by a large corporation or a wealthy family. Will the gamble pay off? No one is sure, but it remains an ambitious move; one that has many intrigued and others cautiously optimistic.

The Montreal daily, which went digital-only just last year, employs 585 people, and has one of the largest and most prestigious newsrooms in Canada, has not been afraid to venture into uncharted territory before and has displayed a willingness to explore the possibilities and business model options available.

Mixed reactions to the announcement

The reaction to the news has been mixed. Some see it as a bold move, in keeping with the times and the current financial woes facing print media, and others see it as the rich benefactors pulling the plug. TVA Nouvelles, which is owned by rival Quebecor led with a predictably dire Power Corporation abandons La Presse, while it’s so-called “scoop” about former Bauer executive Graeme Roustan buying the paper turned out to be completely false.

Globe and Mail journalist Les Perraux was quick to acknowledge that this strategic move required, at the very least, some chutzpah.

Exiting the company meeting, La Presse journalist Karim Benessaieh was quoted as saying, “The La Presse deal is akin to parents offering their kids $5,000 and encouraging them to move out, buy a car and figure it out.” He called the move “scary but exciting too.” Once the newspaper switches to a not-for-profit model, it can no longer be sold to a for-profit company.

Montreal Gazette copy writer and media blogger Steve Faguy tweeted what so many journalists have pondered at least once a day since the media landscape started changing and journalism became as precarious a profession as working in a coalmine.

Communications Workers of America/Canada (CWA Canada), the country’s oldest media union and its only all-media union, which represents about 6,000 media workers across the country, welcomed La Presse’s ‘social trust’ model as an alternative to corporate ownership.

“The move to a not-for-profit ‘social trust’ is exciting and we’re very hopeful that it succeeds,” CWA Canada President Martin O’Hanlon said in a press release. “We have been advocating a community-ownership model as an alternative to the corporate control that has devastated the news landscape in many cities and towns across the country. This will be a big test of the viability of not-for-profits as the future of local news.”

CWA Canada ended its news release by, once again, urging the government “to move swiftly on its commitment to look at allowing news organizations to receive charitable status for not-for-profit journalism.”

Edward Greenspon, former editor-in-chief of the Globe and Mail and president and CEO of Public Policy Forum, an Ottawa-based think tank, stated during a CBC interview that the news marked a “historic day in the evolution of Canadian newspapers” and “an admission that the profit model doesn’t work anymore.”

Colette Brin, a professor at Université Laval's Département d'information et de communication and director of the Centre d'études sur les medias, finds the decision by La Presse to be an “unusual bet”.

“While the not-for-profit business model has been attempted before, this is a first for a major metropolitan daily, there is nothing comparable to this in Canada, and very few examples around the world,” she told me during a telephone interview.

“This is a real test for the willingness of the federal government to follow through on its promise and consider news media a charitable organization,” says Brin, who mentions that some media managers have expressed concerns that this model would also result in news organizations becoming indebted to large donors (possibly, the government) the same way they do with large advertisers. She believes that one way to safeguard against that happening is to ensure that not all eggs are in one basket, the money doesn’t come from one major source, and that the governing structure ensures editorial independence is intact.

“That’s probably La Presse’s biggest strength right now; their reputation and the quality of their work. That cannot be overstated,” she says. “But to recruit donors, you need to be able to argue that you’re a worthy, noble social cause that people feel deserves that kind of contribution and that does raise the question of content. Will they be focusing more on hard-hitting investigative journalism? If they want people to donate, they’re going to have to prove that they’re a socially worthy cause.”

Brin considers the move a huge gamble. “It’s possibly as huge [a move] as the tablet application itself because they’re transitioning over to the philanthropic model in a province that has a very low, undeveloped tradition of philanthropy,” she says. “It’s just not in our DNA, and that’s, of course, associated with Quebecers historically relying on stronger state intervention and expecting that they’re tax dollars will do that [philanthropic] work for them.”

Quebec also doesn’t have the kind of deep pockets that can be found in rich donors in a city like New York, or even Toronto, which would make a similar move by the Toronto Star, for example, a good bet.

“That being said,” she adds, “I think the news is really interesting. I’ve certainly been a proponent of developing the philanthropy model for media, not as a panacea but as part of the overall solution.”

The not-for-profit business model isn’t new

While the major change is a first for legacy media in Canada, the business model is not that uncommon a funding model elsewhere. In the U.S., non-profit independent organization ProPublica benefits from a similar model, which allows wealthy donors and foundations to fund public access and investigative journalism. The vast bulk of the money donated goes into world-class journalism. Since it began publishing in 2008, the news organization has won four Pulitzer Prizes for its stellar reporting.

The U.K.-based The Guardian also has a similar model, belonging to the Scott Trust since 1936. The Guardian focuses on public-interest journalism and has no proprietor in the normal sense of the word. The Scott Trust is the sole shareholder of the Guardian Media Group, which publishes The Guardian and other publications. The trust has a sizeable investment portfolio which it uses partly to support its journalism and partly to invest in long-term structural change to keep up with digital transformation.

Here in Canada, The Walrus, a critically acclaimed general interest magazine which publishes long-form journalism on Canadian and international affairs, along with fiction and poetry by Canadian writers, has been operating with a charitable status since 2005. The Walrus Foundation, in addition to publishing the magazine, also runs a blog, podcasts, e-books, a series of short non-fiction films, and speaking events across Canada, including talks and debates on public policy. Its charitable model is somewhat similar to that of U.S.-based Harper's, and is so far sustaining it, while maintaining a ratio of no less than 70 per cent editorial content to 30 per cent advertising, which its educational mandate requires.

“As a citizen and even as a potential donor, I hope La Presse will be transparent in how their new structure works and how the money is distributed,” says Brin.

Will this affect editorial content?

While questioning whether the not-for-profit model will work for a Canadian daily, it can certainly be argued that the for-profit business model has had financially dubious results in the past and the digital platform has hardly been that lucrative. As a result, local news coverage has been decimated across the country in recent years as Postmedia and other companies have slashed jobs and closed publications. But it still remains to be seen how the new model will operate.

“If La Presse wants to go forward with a free model based mostly on advertising revenues and also on philanthropy, I think that’s a really unusual bet,” says Brin. “If you’re going to get most of your money from advertising that money is going to pressure the content to be commercial, and if you want donor money you’re going to produce content that is very public-service oriented, so there’s kind of a disconnect between the two conceptions of the kind of content that they would have to provide. Are they going to be able to do both? Private donors are very demanding about where their money goes. Even if they’re getting a tax deduction.”

While everyone understands the importance of a free press, it’s certainly not enough for the federal government to say that journalism is critical to democracy. Large-scale, national, ground-breaking investigative journalism that acts like a watchdog, holds governments and industry to account, and protects against the maliciousness of ‘fake news’ is needed now more than ever.

What does the future of newspapers hold?

“The loss of local journalists is a serious threat to our democracy,” O’Hanlon said in the CWA Canada press release. “It means fewer journalists reporting on the stories that matter to communities and leaves almost no one to hold local politicians and powerful interests to account in many places.”

Would newfound charitable status for news media, however, potentially entail editorial changes?

“I think that’s entirely possible, and I’m not even sure that was asked during the press conference,” says Brin. “Content is key here.”

She, however, remains cautiously optimistic. “I’ve seen a lot of cynicism in reactions and discussions so far, but I refuse to speculate because I don’t know what the future holds. I don’t think even the folks at La Presse know what the future holds. They’re betting on this model. They have reasons to go forward with it and they explained them in a relatively transparent way during the presser. They didn’t offer numbers, but there are competitive reasons for them not to do so.

“But the question remains: can they have their cake and eat it too? Can they be both a non-profit and continue to behave like they’re competing for ad dollars? It’s uncharted territory and as a scholar and observer, I think it’s fascinating and exciting to see this being tried because it’s a test of many, many things, and I think they have a lot of courage for doing this. It’s going to be a hard ride, I think, with a lot of challenges. They definitely didn’t take the easy route.”

While Levasseur called it “a big step forward” for La Presse, the reality is, they’re largely stepping into the unknown.

The fact of the matter remains, without robust financial returns serious journalism is threatened. An independent press informs, educates, keeps tabs on power and questions. As much as a cliché as it often sounds, it’s vital to a functioning democracy. If not-for-profit organizations and new funding models are springing up it’s, perhaps, because the decline of print has raised serious concerns about the long-term survival of journalism and because different solutions need to be explored.

“It’s not a time for shrinking violets and for people who are afraid of risks,” says Brin. “We have to try things. I believe in journalism, I believe it will continue in some form, and I don’t see any objective reason – other than pessimism -- to believe that this is not going to work. They are going to be hurdles for sure, but if anyone can do this, I think they’re well situated to attempt it and they're being very innovative. Let’s see what happens.”

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