Monday, March 23, 2009

Bailing Out The Media

The Hill Times, March 23rd, 2009

Commons to look into media crisis

Canwest News Ottawa bureau prepares for the worst, but hopes for the best.

By Harris MacLeod

The House Canadian Heritage Committee will hold hearings later this month to look into how the country's media industry is being hit by the global economic crisis, and if there is anything the government can do. But NDP MP Charlie Angus, said the situation for some companies, such as CanWest Global Communications Corp., which has been teetering on the edge of bankruptcy for months, is so dire that the government needs to act now before large chunks of Canada's media infrastructure disappear forever.

"I'm very, very concerned that we're going to lose media infrastructure that is not going to be replaced," said Mr. Angus (Timmins-James Bay, Ont.). "Once these regional domestic voices are gone it's going to be very difficult to replace them."

Mr. Angus said the government has been "asleep at the switch" in protecting Canada's media industry.

Canwest, CTV, and public broadcaster CBC, three of Canada's largest media organizations, have all been hit hard by the economic downturn along with daily newspapers across the country.

CTV has already closed TV stations in Southern Ontario, and has also laid off staff, and CBC is expected to announce massive layoffs in the coming weeks. Canwest is suffering the most, though the company has managed to get another extension, this time until April 7, to negotiate an agreement with its creditors to manage the company's nearly $4-billion debt.

Last week The Canadian Press reported that the government was considering stepping in to provide some relief for Canwest, possibly by loosening regulations and making tax changes.

The company's CEO, Leonard Asper, and Prime Minister Stephen Harper (Calgary Southwest, Alta.) have reportedly had at least one face-to-face meeting.

"We're thinking about whether or not there's anything the government can do, but I can't be any more specific than that right now," Heritage Minister James Moore (Port Moody-Westwood-Port Coquitlam, B.C.) said last week.

The House Heritage Committee's first witness will be Canadian Radio-television Telecommunications Commission Chairman Konrad Von Finckenstein.

CTV and Canwest have both complained that the CRTC's refusal last fall of their request to charge fee-for-carriage for their television services has hindered their commercial viability.

Mr. Angus said the CRTC has "dropped the ball" in regulating Canada's media industry, and that in addition to Mr. Von Finckenstein he also hopes to hear from those effected by the downturn, such as the managers of CTV's A-channel TV-stations that have faced substantial cutbacks to both staff and programming.

"We've got a crisis at CBC, we've got a crisis at CTV, and we've got a crisis at Canwest," said Mr. Angus. "But I don't even think we've seen the other shoe drop yet in terms of the media crisis."

In addition to owning the Global television network, CanWest owns dozens of newspapers across the country including the National Post and the Ottawa Citizen. Some of the company's individual properties are profitable entities and are therefore likely to survive if the company falls into bankruptcy.

The Canwest News Service, which was founded in 2003 in Winnipeg and replaced The Canadian Press as the central newsgathering provider for Canwest papers in 2007, is in the most precarious position of the company's properties.

Mary Agnes Welch, a reporter for The Winnipeg Free Press and president of the Canadian Association of Journalists, said it's possible that if Canwest goes under and its papers are sold off individually or in chunks, then maintaining the link with the news service could be part of the sale agreement. She said it's more likely, however, that the surviving papers would return to CP.

Ms. Welch said Canwest is still quite new, and therefore does not have the scope or the breadth of expertise that CP does.

"Once you see some of those newspapers that feed the service fall off, you'll see the service weaken even more. That's not to say that the Canwest News Service couldn't become a really solid thing if the economy was good and the company wasn't in such trouble, but right now if you see some of the newspapers start to be sold off, or Canwest start to really consolidate and face bankruptcy, I think the survival of the Canwest News Service would be pretty tenuous," said Ms. Welch.

The news service's Ottawa bureau, which was founded in 2007, has recently had a change in leadership with the former bureau chief, Gerry Nott, moving to become the editor-in-chief of The Ottawa Citizen. Scott Anderson, who stepped down as editor-in-chief of the Citizen more than a year ago, now heads up the news service.

Most of the news service reporters that The Hill Times contacted for this story declined to speak on the record about what was going on internally, however a few would say off the record that they've been given very limited information about the fate of their bureau and that they are essentially preparing for the worst, and hoping for the best.

"Don't get me wrong, you always want the company you work for to be flourishing and there's no questions that these are tough times not just for Canwest but the entire media industry," said Canwest News Service reporter Andrew Mayeda. "People in our shop have been aware of the overall general decline in advertising revenue and newspaper circulation, and when you pile on top of that an economic crisis it's not totally surprising that we're seeing the things that we're seeing. Management is being as transparent as they can with us and really once you have all the information you can there's really nothing else you can do but do your job."

A former Canwest employee who spoke to The Hill Times on condition of anonymity said the company broke with CP because it was more cost effective to have their own newswire service, however CP editor-in-chief Scott White said that was not Canwest's given reason at the time.

"That was never the reason that Canwest cited to us. It was that they wanted to have complete control over their own content, they didn't like the cooperative nature [of CP]," said Mr. White.

On the possibility of CP stepping in to fill the void if Canwest News Service doesn't survive, Mr. White said his organization would be "ready to speak to any paper, any outlet that wants to take our service." Whether CP would stand to gain from the possible breakup of Canwest is unclear, however, as the Sun Media chain recently broke with CanWest in favour of its own news-sharing service, called Quebecor Media Agency.

CP recently changed its corporate structure, whereby members of the cooperative will become clients who can pay for specific services that CP provides as opposed to the former membership-based structure where news organizations had to pay for everything CP offers.

Ms. Welch said the most in-depth reporting comes when newspapers are well-staffed with their own reporters, and also subscribe to CP. The Winnipeg Free Press, one of Canada's last independent newspapers, has an Ottawa bureau reporter who reports on Parliament Hill, and also receives reports from CP reporters on the Hill.

"If everybody [forms their own newswire service] it actually dilutes the power of having a national wire service that everybody feeds into and everybody participates in. Frankly, I think it's kind of counterintuitive for the Sun to do that, just as I thought it was counterintuitive for Canwest to do it," said Ms. Welch.

(The practical considerations of who gets a bailout, who doesn't, and whether the government takes equity or bonds seem to me to be insurmountable. The problems in Canadian media are not short-term, they are structural. They involve the over-leveraging of Canwest and CTVGlobemedia, and they can't be fixed until these companies are de-leveraged. This would involve spending billions of taxpayers' dollars on privately-owned media, with the very real risk that the bulk of Canadian media could end up passing into the hands of the government. The chances of that gaining traction with the opposition parties in this minority parliament and the public lie somewhere between extremely slim and none.
Other than carriage fees (see post below), I can't see the government being able tio do anything for the media. This really is an issue for the free market.
I also don't see Canwest's main operation being under any greater threat than any other part of the operation. The news copy it creates is needed by the papers and would have to be replaced with CP material. Any threat would be long-term, such as a scenario in which the newspaper chain is sold off piecemiel. Even that would be no huge deal. CP's gains would make Canwest's losses a zero sum for Canadian journalism.
Don't forget, too, that the old Southam chain had one of the best Ottawa news operations while the papers were still members of CP.)


Anonymous said...

In the spirit of a former National Post Editor-in-Chief, no government money for Canwest, please.

Ottawa Watch said...

I really can't see the point of it, either. The proerties should be sold off.