Canada’s journalism industry is bleeding out

In Ernest Hemingway’s 1926 novel, The Sun Also Rises, one of the characters is asked how he went bankrupt. “Two ways,” he answers. “Gradually, then suddenly.” The same could be said of Canadian media right now, which has pretty clearly entered the “suddenly” phase of its long decline. It was just last week’s newsletter, after all, where I suggested that after Bell Media’s massive cuts to its radio and television operations, the “next domino to fall, it seems clear, is Postmedia.”

Now, it’s falling. As the Globe and Mail’s Simon Houpt reported, the company is in talks with the owners of the Toronto Star to merge the two operations, a deal that would consolidate all the city newspapers left in this country under one corporate entity. “The two companies would share operating control of the new entity,” the Globe’s Andrew Willis and Joe Castaldo reported, “while existing Postmedia shareholders would own a 56-per-cent economic interest and Nordstar — owner of about 70 titles — holding a 44-per-cent stake. Nordstar, controlled by entrepreneur Jordan Bitove, would retain a 65-per-cent stake in the Toronto Star, which would become a separate company.”

In theory, such a merger would have to be approved by the federal government, which could reject it on any number of grounds. But if it ultimately rubber-stamped a deal between Rogers and Shaw Communications, two highly profitable telecom companies that already operate in a transparently oligopolistic industry, it seems unlikely that it would block a deal between two dying media companies.

There is, I acknowledge, a certain logic to the deal. Despite increasingly generous government subsidies, both companies are still hemorrhaging cash, with Postmedia alone losing $36.7 million over the first six months of 2023 (after losing $26.5 million over the same period in 2022). It may well be the case that with the ongoing decline in both readership and advertising revenue (thanks to tech giants like Meta and Google), most cities in Canada can no longer support more than one newspaper. It’s not even clear that some can do that.

What is clear by now, though, is that the federal government’s ongoing attempts to staunch the bleeding aren’t working. Keeping the incumbents on life support is a good way to slow their decline, but it does nothing to treat the underlying illness, much less provide a cure. As Paul Wells said in his Substack newsletter, “I certainly don’t think the remedy for our ills is to support absolutely any harebrained policy that would put the largest and oldest news organizations on life support. Surely by now it’s becoming obvious that such policies are futile.”

This isn’t to suggest the federal government shouldn’t support journalism. Now, more than ever, we need government intervention to address a pretty clear market failure, one that threatens to leave Canadians less informed and more prone than ever to falling into echo chambers. We saw the impact of that during COVID-19 when conspiracy theories and disinformation flourished online, and that will only get worse if the digital truth vacuum gets even bigger.

But supplying more bags of blood to a patient who keeps bleeding out isn’t a real solution. We need to reckon with the fact that the economic model that used to sustain the business of journalism — advertising, and specifically classified advertising — is never coming back. And as Wells wrote, “I’m not sure we’d go back if we could. It can’t be replicated with simplistic policy Band-Aids. And if our leaders were honest with themselves, they would admit they wouldn’t go back if they could.”

As to the reader-funded journalism Globe columnist Andrew Coyne suggested the media must embrace, there’s clearly a space for it (one that Canada’s National Observer occupies, in part). The problem with Coyne’s argument is that this space is always going to be constrained by our relatively small population and proximity to the American cultural machine. As I’ve said before, the absence of scale or meaningful cultural boundaries makes Canada (well, English Canada) the most challenging media market in the world right now. That’s not about to change any time soon — if ever.

The declining level of trust that Canadians have in the news, and their renewed reluctance to pay for it, won’t help here. According to a new report from the Reuters Institute for the Study of Journalism at the University of Oxford, the percentage of Canadians who pay for online news dropped from 15 per cent to 11 per cent in 2022. “This is the first decline since 2016, when Canadian data was first collected, and the lowest result since 2019,” academics Sébastien Charlton and Colette Brin wrote.

A strategic reinvestment in the CBC, refocusing the corporation away from things like opinion and entertainment and towards more resource-intensive news gathering and investigative journalism, still makes heaps of sense to me. If there was ever a moment for a major strategic repositioning, it’s right now — especially with a potential Prime Minister Poilievre lurking on the horizon.

Bigger government investment in digital media operations, ones that meet some basic standards of journalism (looking at you, Rebel Media), seems equally obvious. There are plenty of levers available, from tax credits to direct subsidies, that could support the flourishing of a wide range of operations and organizations that actually meet today’s needs rather than simply sustaining yesterday’s choices.

It should also use the ongoing negotiations with social media giants over Bill C-18, its Online News Act, to tilt the table towards the future rather than the past. As it stands, as much as 75 per cent of its estimated $320 million in revenue would go to giants like Bell Media, Rogers Communications and the CBC. Instead, they should be trying the reverse and sending the majority of revenue collected to publications and ventures that were created with the 21st century (and its dominant means of communication, the internet) in mind.

But whatever it does, it needs to do something big — and fast. A merger between Postmedia and the Toronto Star might slow the demise and diminishment of each, but they’re both still stuck on the same road to oblivion.

If we want our democracy to be informed by facts and data rather than conspiracy theories and digital memes, we need to invest some of our shared resources in some new ideas and opportunities. Yes, the cost may be high. But the cost of doing nothing here is much, much higher.

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