Media Bailout Failed: Memo

Cabinet’s costly $595 million media bailout failed to save jobs and included only “temporary” measures, says a briefing note for Heritage Minister Pablo Rodriguez. Heavily-subsidized newspapers cut jobs while the only significant growth in media occurred with unsubsidized digital startups, wrote staff.

“Since the beginning of the pandemic 78 news outlets closed including 65 community newspapers,” said the note Federal Support For Journalistic Content. “However in the same period 57 local news outlets have launched: two TV stations, five radio stations, nine community newspapers and 41 online news organizations.”

“Due to government support and a recent boost in advertising revenue some news organizations have experienced some stability and growth,” said the note. “Since the peak of the pandemic closures 16 community newspapers have reopened although overall job losses have continued upwards.”

Subsidies like a 15 percent subscription tax credit were only “temporary,” said the note. The tax credit and a 25 percent payroll rebate worth $13,750 per newsroom employee were originally budgeted to last five years. They are to expire March 31, 2024.

The briefing note is dated March 3. Cabinet released it Friday without comment, only days after the chief lobbyist for newspaper publishers demanded more subsidies. “We have a market failure here,” Paul Deegan, CEO of News Media Canada, testified May 30 at the Senate transport and communications committee.

“We need a solution,” said Deegan. “And that’s why we’ve come to government even though frankly we would like to stay as far away from government.”

News Media Canada publishers cut so many jobs the cost of payroll rebates was less than budgeted, according to an Inquiry Of Ministry tabled in the Commons January 24. Rebates alone were budgeted at $170 million. Actual costs to date are $96.1 million. “The loss of even just one job is a tragedy,” Heritage Minister Rodriguez earlier told reporters.

A senior official in Rodriguez’s department acknowledged April 26 the unprecedented scope of direct subsidies did not save failing media companies. “We have seen a significant decline in journalism,” said Thomas Ripley, associate assistant deputy heritage minister.

“The labour tax credit that’s in place, notwithstanding those interventions we continued to see a decline in news,” Ripley told the Senate communications committee. Records show most publishers double-dipped on federal grants through the pandemic, drawing 25 percent journalism payroll rebates and additional Canada Emergency Wage Subsidies under a Covid relief program now expired.

By Staff

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