Canada’s media mess provides a cautionary tale for the UK
Not only will publishers not be getting any money from Meta, they likely won’t get any from Google either, as they have threatened to similarly block news in Canada when the law comes into effect in December. Ironically, publishers will instead lose millions instead, as the agreements they already have with at least Meta will be cancelled, and probably those with Google as well. The knock-on effect makes it a triple-whammy when you also consider the traffic that news media will lose to their websites from the platforms. Worst affected will be online-only publications which have depended on that traffic to build an audience. Most did not want the Online News Act and many spoke out against it, but they were drowned out by the newspaper lobby led by industry association News Media Canada. It is dominated by the country’s two largest chains, which are now owned by a private equity firm and US hedge funds.
The Online News Act is the second in a series of bills designed to regulate the Internet, which, when taken together, include many of the same elements as the UK’s omnibus Digital Markets, Competition and Consumers Bill now before Parliament. An Online Streaming Act passed in April will tax and regulate digital video services in Canada, which are mostly owned by U.S. companies such as Netflix, Disney, and Amazon. A so-called Online Harms Act designed to combat hate speech and online bullying was introduced in 2021 but died on the order paper with an election call. It was criticised by civil libertarians for potentially prohibiting otherwise lawful speech and was thus being revised, but so far it has not been re-introduced. Legislation aimed at increasing online privacy and consumer rights is also planned.
One of these things, on closer scrutiny, is not quite like the other ones, and a realisation is growing in Canada that the government may have been co-opted in its enthusiasm to regulate the Internet to participate in what has been called a “shakedown” of the digital giants. Canada’s news media have literally been on the dole for the past five years since they lobbied the government for a five-year $595-million bailout that expires next spring. This has prompted publishers to adopt Rupert Murdoch’s successful strategy in Australia of persuading the government to force the digital giants to share their advertising revenues with newspapers.
Canadian publishers lobbied for the Online News Act in part by running blank front pages for a day and also spiked several opinion articles by academics that had been accepted for publication by editors. Canada has long had one of the free world’s highest levels of media ownership concentration, along with Australia. It went to another level in 2000 with the ‘convergence’ of newspaper and television ownership, against which Canada had no regulatory safeguards, unlike most other countries. The multimedia business model collapsed with the 2008-09 recession, when advertising revenues dropped sharply, and Canada’s news media have been lurching from bad to worse ever since. The country’s largest newspaper chain, Postmedia Network, was acquired out of bankruptcy in 2010 by a consortium of US hedge funds which had bought much of its previous owner’s high-interest debt on the bond market for pennies on the dollar. They have since taken more than $500 million out of the company in debt payments. The country’s second-largest chain, Torstar, was bought from its owning families at the outset of the pandemic in 2020 by private equity firm NordStar Capital, which has been similarly stripping the company with closures, redundancies, and asset sales.
My research on UK newspapers, which was featured in the 2019 Cairncross Review report, has found them much healthier than their Canadian counterparts despite (or perhaps due to) not receiving a bailout. Most are making their best profits in years and have been transitioning successfully to hybrid online publications through the use of paywall subscription schemes. The transition was ironically aided by the pandemic, which accelerated a trend to online news consumption, but this seems to have been a well-kept secret as publishers instead plead poverty in hopes of receiving a government-ordered slice of platform revenues.
This was exemplified by Murdoch’s 2021 application to the government to be released from his undertaking, made upon purchasing the Times and Sunday Times in 1981, to keep their management structures separate in order to help preserve media diversity. As I showed in my 2022 book Re-examining the UK Newspaper Industry, News UK pointed in its application to the plummeting print circulation and advertising revenues of its Times Newspapers subsidiary brought by the pandemic but made no mention of its soaring online revenues. Shortly after its application was granted last year, Times Newspapers filed its 2020-21 financial results with Companies House, which showed that its profits had doubled from the previous year to £52.5 million. Its 2021-22 results filed in April showed them up another 58% to £82.9 million.
As in Canada before the Online News Act became a fiasco, few in the UK seem to have questioned the wisdom or fairness of forcing digital entrepreneurs to subsidise legacy media. One notable exception has been the IEA’s report Breaking the News.
On the other end of the scale, a consultancy report commissioned by DCMS for its inquiry into the sustainability of local journalism oddly omitted Companies House data after 2018 which show the recent renaissance of UK newspapers. The debate seems to have instead been dominated by a shrinking handful of ever-larger media owners such as Murdoch, whose newspapers have relentlessly demonised Google and Facebook.
In the end, the more important lesson to be learned may not be whether legacy media should be funded by the digital platforms, but whether UK media owners have been allowed to grow too powerful and are now using their control of the country’s press to advantage themselves even further.
Marc Edge is the author of seven books, including The News We Deserve (2016) and The Postmedia Effect (2023). He recently retired to Ladysmith, British Columbia, after teaching at universities in five countries. His research can be found online at www.marcedge.com.