Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 36 - Evidence - May 30, 2018
OTTAWA, Wednesday, May 30, 2018
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to continue its study on emerging issues related to its mandate and ministerial mandate letters.
Senator Patricia Bovey (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Welcome, honourable senators.
This evening, the Standing Senate Committee on Transport and Communications is meeting under our general order of reference to continue its study on the deductibility of Internet advertising.
[English]
I would like to welcome our witnesses, Thomas S. Saras, President and Chief Executive Officer, Media, National Ethnic Press and Media Council of Canada; Matthew Holmes, President and Chief Executive Officer, Magazines Canada; François Côté, Executive Director Alliance des radio communautaires du Canada; and from the Association de la presse francophone, we have Linda Lauzon, Executive Director and she is also representing the Quebec Community Newspapers Association, the QCNA, together with the APF and ARC from the consortium of official language community media, which serves the minority francophone and anglophone populations in Canada. With her we have Francis Sonier, President, Association de la presse francophone, who with us by video. Thank you for joining our meeting tonight. Before we begin, I will ask my colleagues to introduce themselves. I’m Patricia Bovey from Manitoba.
Senator Mercer: Terry Mercer from Nova Scotia.
[Translation]
Senator Gagné: Good evening. Raymonde Gagné from Manitoba.
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Griffin: Diane Griffin, Prince Edward Island.
Senator MacDonald: Michael MacDonald, Nova Scotia.
The Deputy Chair: I will invite Mr. Saras to start with a presentation. He will be followed by Ms. Lauzon, Mr. Côté and Mr. Holmes. I think all five of you are ready to receive questions after your presentations.
Mr. Saras, the floor is yours.
Thomas S. Saras, President and Chief Executive Officer, Media, National Ethnic Press and Media Council of Canada: Thank you, Madam Chair.
With an increasing number of newcomers and substantial changes in Canadian demographics, mother tongue of more than 35 per cent of the Canadian population is not English or francophone. Therefore the importance of a foreign language press in Canada has been enlarged. The role of the National Ethnic Press and Media Council of Canada is to take serious and active interest in fostering Canadian unity and territorial integrity. As a pro-Canadian group, it will pursue this goal vigorously in the future. The ethnic press of Canada performs a unique function with the boundaries of the Canadian mass media.
Generally, its purpose is to inform readers in a language more readily understood than the official language of the country. This press, serving the various ethnic communities of Canada, has fulfilled its role which goes beyond the immigrant communities’ internal needs. For more than 11 decades, the ethnic newspapers have been meeting the challenges of assistance, guidelines and integration of millions of newcomers to Canada from many lands.
It performed this role in full awareness of a great responsibility towards a country, which has been developed by many cultural and linguistic communities.
In addition to providing the news to these people, the ethnic press is informing them about settlement issues, available assistance and also helps to be introduced to our democratic institutions as well as the new way of living in the new country.
To these citizens who, at the one time or another, have found themselves behind language barriers in a country whose laws, traditions and customs were different from their own, the ethnic press is acting as a guide, interpreter and teacher, and also as an intimate and trusted friend. Its role is to introduce the members of the immigrant communities to their own environment as efficiently and painlessly for themselves and their community as possible; the socio-economic system of the new country, in order for them to become full-fledged citizens of Canada as soon as possible; willing and able to contribute their talents and abilities for the benefit of all Canadians.
Classic democratic theory always viewed democracy as a set of institutions, which both promoted and depended upon the full national development of the individual.
With the influx of immigrants after the Second World War, and even recently, both the duties and influence of the ethnic press in Canada have multiplied. The ethnic newspapers and magazines now serve over 7 million Canadians, who are neither anglophone nor francophone. This is in addition to all of those who have been here for a generation or more but still retain the habit of reading papers in their own mother language.
Conversely, it has also tried to inform newcomers about the existence of negative influences and ideological conflicts counterproductive to democracy and Canadian traditions. This is done in the spirit of helping them become better Canadians. In this enhanced role, the ethnic press became an important tool in influencing new Canadians, who arrive daily to the hospitable ports of this great country of ours. To some extent, this has been well recognized by many politicians, but unfortunately not by all levels of the governments.
With the increasing numbers of newcomers and substantial changes in the demographics of Canada, the mother tongue of more than half of the Toronto population, for example, is not English or French any more. The scope of the importance of the foreign-language press in Canada has been enlarged. There is a qualitative change in its operation.
It is no more merely an information disseminating medium, but rather a powerful vehicle operating at the grassroots level. In the past, it took serious and active interest in fostering Canadian unity and territorial integrity; and, as a pro-Canadian group, it will pursue this goal vigorously in the future as well.
While ethnic media and ethnic communities continue to participate fully in nation-building processes, it is important to recognize their aspirations, dreams and concerns cannot be different than those of mainstream society and media. Therefore, the members of the ethnic press cannot be looked to for special status or treatment by the mainstream media; they would feel hurt if they were treated as second class citizens and negligible entities.
Today, the social structure and educational level of the ethnic communities are compatible to those of the members of the founding peoples of the nation. This is easily seen as more and more members of the ethnic communities in Canada are seeking elected offices, at all levels, at each election. Furthermore, they are making very productive and effective contributions in all walks of life in Canada.
Therefore, the ethnic press expects that both the ethnic press and the ethnic communities should receive equal treatment and be accepted as equal partners in the nation-building process. Finally, it must be recognized that, as long as immigration to this country continues, the importance and influence of the ethnic press will be more profound.
Canada today is in a period of socio-economic changes in a world that is becoming smaller and smaller daily, looking for new markets and searching for new partnerships. In this connection, the ethnic press, and the ethnic communities they serve, could prove to be an important participant in Canadian economic growth because of their ability to speak all of the languages of the world, their global contacts and global knowledge.
This strength of the ethnic communities and their media has not been fully recognized by Canadian society. In view of its internal importance due to the demographic changes and external influence on the Canadian economy through international trade and investment, the ethnic press and media have a multi-dimensional role to play. The council is trying to find the right place in the social, cultural, political and economic life of Canada.
The National Ethnic Press and Media Council of Canada, is a non-profit, non-governmental media organization with 850 member publications, printing in about 110 languages, along with 150 radio and television directors, websites and TV producers and journalists.
Today, I’m appealing to your committee for three things: We want to have the support of the government by receiving advertisements, government advertisements and notices that used to happen over the years, from time the time. The last four years, our members have not been receiving even one message or advertisement by the Government of Canada. The second thing is something I also requested in my previous meetings with this committee, the pension for the members of the national ethnic press or the publishers of the ethnic communities, and, by saying the pension, I mean the CPP. These people are working very hard. They are working seven days a week, sometimes 18, 20 hours a day, and, when they reach the age of 65, they are going to get only whatever amount in welfare they are going to receive because the publications are not getting revenues and they cannot pay the CPP. This is not fair for these hard-working Canadians. They are doing a really hard job.
Finally, I will ask the committee to take a look at the possibility of tax, at least 10 per cent, to foreign advertisements on the websites. At this point, I want to bring to your attention the National Ethnic Press and Media Council of Canada has created a mass media website, under the name of www.national ethnic press council.com.
There are, right now, 200 websites of the ethnic press, of every language and every community of Canada. We are expecting, by the end of this year, there are going to be 300 and by the next year there are going to be 450.
These websites can support and serve all Canadians, all of the needs of Canadians. Unfortunately, we cannot afford to have any financial support to anyone.
The result is foreign websites are receiving Canadian advertisements, but we cannot. Therefore, it is very important, and I’m asking you, please, to consider this thing. Thank you very much.
The Deputy Chair: Thank you, Mr. Saras. I appreciate your intervention, and we’ll move on now to Ms. Lauzon. If I may, we do want time for questions at the end. Can we keep our presentations succinct?
Linda Lauzon, Executive Director, Association de la presse francophone: I timed myself, so we’re okay.
[Translation]
Madam Chair, ladies and gentlemen, members of the committee, good evening.
The Consortium of Official Language Community Media is comprised, as was said earlier, of three national organizations representing the official language community media that serve minority francophone and anglophone populations in Canada.
Since the summer of 2016, these three member organizations making up the consortium have been speaking with a single voice. I am here this evening with my colleague, Mr. François Côté, Executive Director of the Alliance des radios communautaires du Canada, or ARC du Canada, and my president, on screen, Mr. Francis Sonier, who is also the Executive Director of the daily newspaper Acadie nouvelle in New Brunswick.
[English]
We wish a representative of QCNA, the third party of our consortium, could be with us today. Unfortunately we were informed there was not enough space to enable this. Next time we would like our three organizations to be here because we have always been working in French.
[Translation]
We have been joined at the hip since 2016.
[English]
Please note Mr Côté will also be talking and behalf of the Consortium and Mr. Sonier will be available to answer questions.
[Translation]
We invite you to consult the brief which we provided to you this afternoon on behalf of our three organizations.
Official language community media in minority settings provide a window into the life of the community and remain a cornerstone around which the development of minority anglophone and francophone communities takes place. These media are also an essential service, since they are often the only source of information in their language, in their region or province or territory.
They are the voice and reflection of communities that are most of the time isolated within majority language communities in remote or urban areas, or in areas that are further north in Quebec such as the Gaspé Peninsula, Abitibi, or more far-flung regions.
Our media are a community development and identity-building tool. They are a vitality indicator of official language communities used by the government. Canadian Heritage uses our media to find out how our communities are doing.
Despite this, over the last 10 years, official language community media have faced major challenges as a result of a constantly deteriorating situation. A number of official language minority community media find themselves on the brink of closure. Four community radio stations in Canada will close their doors over the next months, if nothing is done. Three Association de la presse francophone, APF, newspapers and three Association des journaux régionaux du Québec, QCNA, newspapers are facing the same situation. These are imminent closures that will occur within three to four months.
This is why, in 2006, the consortium undertook political representations, not only to ensure the survival but also the ongoing development of community media. For example, to respond to the many structural problems currently faced by community media, the consortium is asking the federal government to modernize the Official Languages Act to provide a legislative framework for the role of minority official language community media.
In addition to the structural problems, minority official language community media face a very precarious financial situation as a result of the loss of advertising revenue, both governmental and private. I think it is very important to point this out to the committee.
The deductibility of advertising, that is, expenditures for the purchase of most foreign digital press or radio advertising, should no longer be deductible under the Income Tax Act. The consortium agrees with the basic reasoning of the study that the loss of advertising revenue has contributed to the current national media crisis. This crisis is keenly felt by the community media that make up the consortium, which must devote additional resources to respond to the digital revolution.
Our media are very comfortable with the digital shift, but they do not have the resources to accomplish it at this time. However, they fully intend to follow the trend.
The consortium also agrees with the study’s recommendation that a new interpretation of the definitions of “newspaper” and “periodical” under the Income Tax Act is needed. In the consortium’s view, closing the tax loophole would allow the government to implement measures that could help maintain public access to critical information while preserving the independence of the media.
Finally, the consortium believes that the federal government must, at the same time, consider curbing its increased use of the Internet as an advertising medium to reach the public in place of traditional tools such as newspapers and community radio stations. The economic challenges faced by the community media that make up the consortium reflect a crisis in local media in Canada.
Layoffs of journalists have become common. The Saskatchewan francophone publication, L’Eau vive, has no journalists; it had to stop publishing the paper version of its newspaper and is trying to publish a biweekly PDF version. In Prince Edward Island, the weekly La Voix acadienne had to cut staff and concentrate on outside projects. In the Yukon, the Aurore boréale newspaper had to cut one full-time journalist position.
In Quebec, the Aylmer Bulletin and the West Quebec Post have had to lay off 30 per cent of their staff over the last two years. The Quebec Chronicle Herald, the oldest community newspaper, founded in 1874, has had its staff reduced to a single employee, and the Gaspé newspaper is operating almost exclusively with volunteers.
When it comes to community radio stations, more than 60 per cent do not have the resources to fulfil the requirements for their CRTC licence.
François Côté, Executive Director, Alliance des radios communautaires du Canada: The four radio stations in Nova Scotia are on the brink of closing. The community radio station in Newfoundland depends on a handful of volunteers, and a number of community radio stations in western Canada are in the same position.
Because of their geographic or urban isolation in majority language communities, official language community media are less likely to attract advertising buyers since the markets they serve and their circulation are often smaller. As a result, their ability to produce self-generated revenues and diversify revenues streams is compromised by the saturation of the markets they serve.
The transition to the digital era is necessary, but complex and difficult, making the situation of the community media that make up the consortium even more precarious. Faced with the problems of failing revenues, high costs and cumbersome cultures, and desperately trying to make incursions into the digital arena, established media groups have become less concerned with seeking and collecting original information and turned toward the processing of existing information.
This is a serious problem, since community media are essential pillars of our society. Not only are they guardians of our democracy, the community media that make up the consortium play a vital role in the development of our official language minority communities.
The future of French and English in Canada’s official language minority communities depends to a large extent on access to quality community media. In the final analysis, the big losers are Canadians who live in official language minority communities, the francophones outside Quebec and the anglophones in Quebec.
The consortium agrees with the Friends of Canadian Broadcasting that the government must be involved in solutions and that the crisis in the media is not a matter of the market rejecting an inferior product. Indeed the readership of APF members and the confidence of the public have not diminished. The monthly readership rate of community newspapers varies between 47 per cent and 54 per cent depending on the region in Canada. Three factors encourage the reading of a community newspaper: access to local news, the content in general, and the fact that in certain regions, it is the only francophone newspaper. In addition, more than 300,000 people listen to the radio stations that belong to the ARC du Canada, and the listenership is stable.
As stated by the Interim Commissioner of Official Languages in her final investigation report tabled in June 2017 following complaints regarding a drastic reduction in government advertising in the media:
No data submitted in the course of the investigation, nor any documents consulted, confirmed the opinion that official language minority newspapers and radio stations no longer have a place in those communities, or that they no longer provide support to them or contribute to their identity building.
Although it is difficult to assess the extent to which closing the tax loophole could bring funds back to the community media that make up the consortium, the consortium believes it could very well help support media in difficulty, according to the statistics set out in the study.
According to the consortium, the inconsistent enforcement of section 19 of the Income Tax Act is not reasonable. In particular, the consortium would like to emphasize the point raised in the study that a new interpretation of the definition of “newspaper” and “periodical” under the Income Tax Act is needed in order to reflect the current reality.
As part of a movement started by La Presse+, community media are going through a period of technological change. They have websites and many use both paper and digital formats. The digital revolution is in full swing, and the distinction between physical and digital media made by the Canada Revenue Agency no longer reflects the reality of the community media that make up the consortium.
A response to the study provides the perfect opportunity for the consortium to reiterate the importance of government advertising for the preservation of community media. Although only indirectly related to the recommendations of the study, federal advertising is a central issue for the community media that make up the consortium and continues to be at the heart of its activities. The revenue of the community media that make up the consortium has decreased significantly due to a decline in advertising revenue from federal departments and agencies.
By way of indication, government advertising in official language media fell from $1,938,876 in 2006-07 to $422,269 in 2014-15. In 2015, complaints regarding the drastic cut in government advertising in the media were filed with Canada’s Commissioner of Official Languages. The final report on the investigation by the Interim Commissioner of Official Languages was tabled in June 2017 and includes the following conclusions:
The investigation shows that federal institutions do increasingly tend to use the Internet for their advertising and that that medium has been favoured for at least ten years, not because a directive was issued to that effect, not because the 2006 Communication Policy obliges them to do so, but because the Internet has become essential in this age of electronic communication. . . At the same time, we also see a corresponding constant, pervasive reduction in the advertising revenue of newspapers and radio stations throughout the country, as is the case for community newspapers and radio stations in OLMCs.
In short, the consortium supports these recommendations and believes that in addition to closing the tax loophole, government bodies should consider making a strategic investment in minority community media, recognizing their unique character and the needs of official language communities as a whole. In concrete terms, as a short-term solution, the consortium recommends that the federal government:
1) Devote 5 per cent of government advertising to minority community media. There are at this time more than 2 million francophones and anglophones in minority communities in Canada, which is equivalent to 5.5 per cent of the population of Canada. The consortium is asking for a permanent advertising envelope of $2 million — which is equivalent to approximately 5 per cent of the advertising envelope of Public Services and Procurement Canada, which is about $40 million.
2) Make a strategic investment, through the national organizations that represent minority community media in special dissemination projects in community media that reinject emergency funds directly into all community media.
3) Explore the possibility of creating a refundable tax credit for the production of current news information as recommended on pages 28 and 29 of the report by MCE Conseils.
[English]
The Deputy Chair: Thank you very much. I’ll ask Mr. Holmes to make his presentation and then we’ll move to questions.
Matthew Holmes, President and Chief Executive Officer, Magazines Canada: Madam chair, ladies and gentlemen, it’s a great pleasure to join you this evening. I’m President and CEO of Magazines Canada, the national association representing the majority of Canadian-owned and Canadian content magazines. French, English, Indigenous and ethnic member titles cover a wide range of interests, trades and communities across the country.
I’m intrigued by this committee’s mandate, transport and communications. It strikes me that much of our nation building of Canada has come as a result of transportation infrastructure or communications, often the two in tandem. In fact, Senator Keith Davey in his landmark report on the media in 1970 claimed that “in terms of cultural survival, magazines could potentially be as important as railroads, airlines, national broadcasting networks and national hockey leagues. But Canadian magazines are in trouble and their survival is not assured.”
I view your discussion on digital tax policy as it relates to media as a very important and timely one.
Canada is home to nearly 2,700 magazines that help create communities of readers. These may be geographic or linguistic, they may help define a group via shared identities, lifestyles or beliefs; they may serve a trade, professional or creative class. They may provide critical business intelligence, news and long-form journalism or may deliver information, entertainment and inspiration. For everyone, everywhere in Canada, there is a magazine.
Canadian magazines are published in 34 languages, in every province and territory in the country. Editorial focus consumer titles represent 51 per cent of the total, followed by business and professional magazines, including farm titles at 39 per cent. Ethnic and arts cultural titles each represent 5 per cent of the total.
Magazine brands reach over three quarters of Canadians of all ages across all platforms and venues — print, digital and mobile, social, video, webinars, live events even in virtual reality.
Unfortunately, over the past few years the underlying economics of consumer magazines in Canada in particular have collapsed. Canadian print advertising spending has migrated to digital platforms. Digital advertising has, in turn, migrated offshore, largely to U.S.-based digital content distributors. Between 2007 and 2017, advertising revenues decreased by half, from $732 million to $390 million. This decline has accelerated in the past four years by one third. If anything, I understate the numbers, which have likely dropped even more.
Now that you have a sense of our industry let me return to the infrastructure that helps support it. From the earliest days of our national railways where the train stations were also radio stations, which eventually led to the formation of our national broadcaster, our ability to connect with our fellow citizens has been established through infrastructure and proactive cultural policy. Canada’s direct support for the magazine sector is older than the country itself; it predates Confederation. Like the railways, the original postal subsidy was designed to ensure Canadians across the country had access to each other through the information and stories that tie us together.
The ongoing principal support for magazines is the Canada Periodical Fund, an essential program for our industry. The Canada Periodical Fund is buttressed as well by the Foreign Publishers Advertising Services Act of 1999, which limits how much space foreign publishers can sell to Canadian advertisers in a Canadian split-run edition, and as well by section 19.01(1) of the Income Tax Act. As you know, however, this was never applied to digital properties which largely did not exist at the time the legislation was drafted.
Private advertisers and our own government, as noted by my colleagues here, continue to spend record amounts of foreign digital advertising, with Facebook and Google accounting for over 70 per cent of total revenue in the online advertising space and taking 90 per cent of every new dollar spent in this realm. This money is leaving the country untaxed, supporting foreign content aggregators who do not create jobs in Canada or local content and is no longer providing a revenue stream to domestic media and cultural creators.
I note the top two recommendations coming out of the Public Policy Forums January 2017 report The Shattered Mirror call on policymakers to enhance section 19 of the Income Tax Act to cover digital in order to level the playing field among platforms and incentivize ad purchasing from Canadian media. Further, to extend GHT and HST to digital subscriptions and advertising revenues in order to remove a tax disadvantage imposed on Canadian companies versus their foreign competitors.
The more recent study shared with this committee by the Friends of Canadian Broadcasting to close the loophole has as the main premise that advertising purchased on foreign internet delivered media that act as broadcast and news services should not continue to be deemed a deductible expense under the Income Tax Act, section 19. Magazines Canada agrees with both positions. Indeed, your own colleagues in the House of Commons, in this very session of Parliament, have had similar findings.
As the committee members will know the House Standing Committee on Canadian Heritage issued its disruption report in June 2017.
The report recommends amending sections 19, 19.01 and 19.1 of the Income Tax Act to ensure foreign advertisers and content platforms are subject to the same tax obligations as Canadian businesses.
More recently, the e-commerce report of the House Standing Committee on International Trade issued in April 2018 recommends the government ensures the tax system is equitable by ensuring online sales are taxed in the jurisdictions where the products are consumed and where the income-related activities occur, and that the government should apply sales tax on digital products and services sold here by foreign sellers.
Many countries have begun to eliminate the tax holidays for foreign digital companies, including the European Union, New Zealand, Australia, South Africa, South Korea, Japan, Israel and many others. Confronted with the borderless digital world, most of these jurisdictions have decided to shift taxation from the location of the company headquarters to the location of that company’s customer. The large companies conducting business in these jurisdictions have generally complied.
I’m at a total loss as to why Canada cannot begin to address this issue in order to provide a level playing field, tax equity and once again ensure the infrastructure of our nation supports the cultural and communications industries that help bring us together.
Thank you for your time.
The Deputy Chair: I would like to thank all of you for your presentations. The information contained in each is helpful, useful and certainly compelling in many areas.
I know Mr. Sonier is here to provide backup for questions that may come toward the consortium. Let’s begin with the questions.
[Translation]
Senator Gagné: My question is for Mr. Sonier. Before I begin, I wanted to thank you for your presentations.
Mr. Sonier, in your brief you recommend that the government allocate 5 per cent of government advertising to community media in minority communities. The figure is based on the fact that there are 2 million francophones and Anglophones living in a minority situation. These data come from 2011 Statistics Canada statistics and represent approximately 5.5 per cent of the population of Canada.
I will, as a comment, say that your request seems very modest given that the potential market of the written press and community radios is much larger, and that many francophiles also consume part of the content. If you add those who know the language, I think that the picture is quite different. For instance, regarding French in Canada outside of Quebec, the number increases by 50 per cent when you add those people. So why do you only recommend 5 per cent?
Francis Sonier, President, Association de la presse francophone: Yes, 5 per cent may seem modest, but you have to understand that this is a very short-term measure. Over the past 12 years, community media lost that amount in advertising. It’s certainly a minimum and a very short-term measure. It is also not the only measure, because there has to be more advertising.
The second measure we are proposing today are special projects, structuring projects such as special reports, for instance, on women’s right to vote or the one hundredth anniversary of the National Hockey League. These are projects that allow the federal government to allocate funds to get people to know events or periods of history that are important to Canadians. These projects also serve to inform people and allow them to use the community media that are in place and have a presence and credibility within communities. So that is the second measure that would increase revenues, not only by 5 per cent but by more than that.
Senator Gagné: In your brief, in paragraph 14, the consortium states that the federal government should at the same time curb its increased use of the Internet as an advertising medium to reach the public, to the detriment of more traditional tools such as newspapers and community radios.
Yesterday, officials from Canadian Heritage testified here before the Standing Senate Committee on Transport and Communication, and they specified that the government uses advertising on Facebook, among others, in order to obtain a good return on its advertising dollars. What is your answer to that?
Mr. Sonier: I have trouble understanding that one would choose social media alone to do advertising. Several newspapers have very popular news sites where one does not see any federal advertising. And yet, they are newspapers, websites, no matter the platform that is used, that do reach the communities. A recent survey by Totum Research in February stated that 9 Canadians out of 10 read a newspaper or the content of a newspaper, whatever the platform. I’m talking about 60 per cent of newspapers alone, but if we add all of the other digital platforms that are related to those newspapers, which have credibility and a presence in the communities, we are talking about 9 Canadians out of 10.
Social media may be very effective, but newspapers and the news sites of newspapers are extremely powerful, just like community radios and the sites of those radios. The Internet is certainly important, but we aren’t investing in the right places if we invest only on the Internet, and all the more so since we aren’t investing in Canada; we are investing elsewhere, in enterprises that pay no income tax in Canada. That is problematic.
Mr. Côté: I’d like to add something to what my colleague said. Marc S. Pritchard, the director of marketing at Procter & Gamble, said this week that a large part of digital advertising investment is pure loss. Consequently, that enterprise intends to redirect 50 per cent of its investments in digital media toward more traditional media such as radio, newspapers and television.
On the Internet, you can read incredible articles on fraud in advertising and click-throughs, et cetera. We’re talking about billions of dollars in fraud. So I think that at a certain point we will have to get in touch with what is really going on on the Internet with regard to advertising, because the return does not justify the investment. If the CEOs of large companies are saying this, I expect it must be true.
Senator Cormier: It’s my turn to thank you for your presentations, but also for the work that you do. The importance of local media and regional media is no longer a matter for debate. We subscribe to all of the arguments you have made.
I’m trying to gain a better understanding of this transition between the print format and the digital format. You said that you are not against digital, that you are headed in that direction, but that you lack resources to do it. I would like to understand the issue of advertising revenue in that context. In other words, would the type of advertising you would be likely to place in digital formats be different from the advertising in print formats? Of course, I understand that the shortfall in advertising revenue from the government is limiting your development, but how could advertising revenue boost your transition to digital? And what impact would this have on the type of digital advertising?
That is my first question. It is addressed to Mr. Sonier or Ms. Lauzon.
Ms. Lauzon: I think it is clear that there is no equivalence at this time. When we talk about digital advertising in a newspaper or elsewhere, it’s very different. First, the cost is much lower and the return on investment is much lower. Mr. Sonier could probably give you the ratio. We are currently working with Canadian Heritage and the Canada Media Fund to develop a digital project that would give us an aggregator to which all of our newspapers would belong. This would increase the circulation required not only by the Government of Canada but also by the large national companies like Telus and Ford.
So, the Association de la presse francophone and the QCNA are working as partners on this file, but the business model of these platforms is completely different from the way we sell things, and so on. We realized that, even though we can sell digital advertising — I have two notable examples. The first is about a client of ours. We were the media partner of a major national partner, and we created a major campaign, similar to the Rendez-vous de la Francophonie. As media partner, we did the inserting for the newspapers, as well as the analyses with the advertisers. However, Air Canada did not want to have any digital advertisements, nor did they want to transition to a digital magazine; they wanted people to be able to hold in their hands a paper magazine with Air Canada advertisements. VIA Rail comes to mind as well, and so on.
Therefore, we need to find a hybrid model that will allow us to make this transition over the next 10 or 15 years. A typical example I always give is the Sudbury Voyageur, which has 18,000 readers. If these readers go digital tomorrow, the Voyageur goes out of business. It would lose approximately 80 per cent of its readers. That is what is important at the moment.
Senator Cormier: Would it lose its readers because they prefer paper to digital?
Ms. Lauzon: Exactly. All of this to say that we need to find a hybrid model that will allow us to develop a transitional business plan, so that we can identify models that suit each community’s pace. There is no one model that will answer the needs of all communities. It is different in New Brunswick, it is different in Yukon, and it is different in Quebec. So, the advertising and the business model related to the advertising business plans must be overhauled, whether we are talking about government or private-sector advertising. There is no readymade solution to this problem.
Senator Cormier: In the 2018 federal budget, the government announced a five-year, $50-million program to support local journalism. When the Action Plan for Official Languages was announced, we knew that there were $10 million over five years, $5 million of which was set aside for student jobs in official language minority community media. For a number of years, you have made emergency requests to ensure this transition. Does this funding satisfy your requests?
Ms. Lauzon: No, it does not satisfy our requests.
Let us start with the $50 million announced in the budget to support local news. First of all, nobody will have access to this money until the next financial year. The way it will be distributed has not been determined yet. We are negotiating with Heritage Canada to try to get a dedicated envelope. Nothing has been decided for now. Will we be able to access this funding? We do not know yet, but we are working on it.
The Official Languages Action Plan says that $10 million has been put into a strategic fund. These are not emergency funds. The minister was clear on that; these funds are for building media capacity. It is the same thing for the funds for the interns at Young Canada Works. These funds are to help building the capacity that will allow to transition towards a new business model.
That being said, if we have no stability as things stand, no foundation, how can we build our capacities? Yes, we are still working with the House of Commons Standing Committee on Official Languages — and it is a very active file — to receive an emergency fund to stabilize the sector and use, as efficiently as possible, the $10 million, the $4.5 million and, perhaps eventually, a portion of the $50 million to build up our network and our community. We want to avoid finding ourselves in the same situation five years from now.
[English]
Senator Griffin: My first question is to one group and my next question is to all the groups.
My first question is to the consortium, on page 3, point No. 14, you ask the federal government to consider curbing its use of the Internet as an advertising medium to reach the public. This puzzles me because shouldn’t the federal government have a responsibility to reach people or communicate with people where their attention already is?
[Translation]
Mr. Côté: You are right. It is also the government’s duty to reach out to all Canadians. The people in Gravelbourg, Saskatchewan, are still using dial-up, and do not have high-speed Internet. The same thing goes for eastern Ontario — no high speed Internet. In Yukon and in the Northwest Territories, access to Internet and data costs a fortune. These people depend on us, community media, for their information.
If the government puts all of its eggs in the same basket, it will end up not reaching out to all Canadians, but rather to only a part of them, and the majority of those Canadians live in major centres, not in remote areas.
[English]
Senator Griffin: Are you saying in your document they’re using too much Internet advertising?
[Translation]
Mr. Côté: Yes, that is what we are saying.
[English]
Senator Griffin: It’s too much.
Mr. Côté: It’s too much. Part of those monies should be going to traditional media instead of the Internet.
Senator Griffin: Or to both, more money to both.
Mr. Côté: Or to both.
Senator Griffin: The question I have for each group is in the Creative Canada Policy Framework announced last September, it aims to be a new vision and approach to creative industries and growing the creative economy. Two parts: First, were you consulted when this policy framework was developed? Second, do you consider this policy framework will support local news in Canada? We might as well start at this end and work our way across.
Mr. Holmes: Thank you for the question. Absolutely, we were consulted and involved throughout the process. I attended the minister’s speech when she announced the first public unveiling of the framework.
We appreciate and support the Creative Canada Policy Framework. Essentially, Minister Joly announced the Canada Periodical Fund, which I mentioned is of critical importance to our industry, will remain the primary vehicle which the Government of Canada will deliver its support to magazines and community newspapers. There is, I acknowledge, a much bigger issue happening within the civic journalism and the news media and the local news in particular. I’m not sure if that one funding envelope at its current level is adequate to address that. What I appreciate in the Creative Canada approach is the government is taking a full strategic approach to the cultural sector, which I think has been lacking.
I have been, over the last three years, at numerous committees at the House and Senate talking about government advertising policy, digital taxation policy, investment in the news and the media. Every department or group responsible for one piece of that can say, “Well, this won’t fix the problem. Me changing this won’t fix the problem.” No one will be able to fix the problem with one little piece of it. It’s a complex puzzle and that’s why we need a strategic approach.
We’re supportive of the beginning of that. We think there will be years of work to do.
Mr. Saras: With regard to the $10 million the government announced, I believe this is a one-time bonus. It depends on the mechanism by which this money will be distributed. We have great differences among us. There are the mainstream magazines and community papers; there are the Quebec magazines and newspapers; and then, in the middle, we have the ethnic press. For example, Canadian Heritage, from an amount of $57 million, only $2 million used to come to the members of the ethnic press. I hear today things are going to be better this year, but from $57 million you give only $2 million to 850 publications, you realize this is not fair.
My question will stay until I will know how they are going to decide to distribute this amount of money.
Senator Griffin: Thank you.
To the consortium, again the same two questions: Were you consulted on the policy framework, and do you consider it will support local news in Canada?
Ms. Lauzon: Yes, we were consulted through Fédération culturelle canadienne-française.
[Translation]
This national organization manages the francophonie aspect of this file.
That said, yes, we were there during the announcement with the minister. We welcomed this measure with open arms. The reason for our disappointment is that a pile of measures like these are announced, but they are not part of an overall plan. That is what concerns us. We look at a file, and we work by ourselves on one issue or another; we are working in isolation. Then, we try to put everything together and develop an action plan that will allow us to achieve our goals. We need a lot of time to access this funding, and there are a number of parameters. Furthermore, it is very costly for our small media.
I fully agree with my colleague representing ethnic radio. If you are a small radio station or a small community newspaper, applying for funding from these programs is a complicated procedure.
So, yes, it is good news, but we need a consolidated approach with all the current programs, including Creative Canada.
Mr. Côté: Mr. Holmes summed up the situation perfectly. I agree with what he said.
Creative Canada is a procedure that will take some time to implement. What we are talking about at the moment is the urgency of the situation for the country’s media.
[English]
Senator MacDonald: Thank you all for being here. In our offices, we get a budget for purchasing periodicals and papers. I don’t subscribe to national newspapers or things of that nature. I do purchase the local weeklies in Nova Scotia, which I really enjoy, because you get all kinds of stuff. I’m a person who doesn’t watch the national news anymore, so it shouldn’t surprise that I wouldn’t buy a national newspaper. I am much liberated by not watching any national newscasts.
I have questions for all of you.
I’ll start with you, Mr. Saras. You say there are 850 publications in the ethnic media. Does that include English and French newspapers in the country?
Mr. Saras: No. Those are only third-language publications. Some of them, though, are printed in English or French. Among my members, for example, is L’Express de Toronto, which belongs to us, but it is French-language.
Also, for example, if you allow me, there isThe Sri Lanka Reporter. The supposed audience are Sri Lankan immigrants, but it’s in English.
There are some publications in English and French. Other than that, they are 95 per cent in another language and have some, say, four or five pages in English for the second generation of immigrants.
Senator MacDonald: I want to ask Mr. Côté and Ms. Lauzon: What about the French and English weekly papers in the country? Do you know the numbers of those?
Ms. Lauzon: Total French and English papers — official languages, you mean?
Senator MacDonald: Yes.
Ms. Lauzon: There are 95 in total right now. That’s not a big number.
Mr. Côté: Including radio.
Ms. Lauzon: Including radio. To give you the breakdown, if I remember correctly, there are 37 Quebec English-community newspapers; there are 24 francophone outside of Quebec papers; and —
Mr. Côté: Twenty-eight.
Ms. Lauzon: — members from you, but there are more.
Mr. Côté: Two more coming.
Ms. Lauzon: Yes, that’s it.
Senator MacDonald: I’m a big believer in community newspapers. You don’t get homogenized news; you get actual news on communities. I find it beneficial.
You mentioned there is no overall plan. I think that’s one of the big problems. Everything is ad hoc; everything is to buy space for six months, political space. We’re all guilty of it.
I think what we should do is try to encourage the government or decision makers to pursue something that can be applied across the board. I think the last thing you want is a fund with a bunch of politicians and bureaucrats picking winners and losers. I don’t want any newspaper to be put through that. It would be unfairly competitive and predatory.
I like the idea of potentially eliminating tax holidays for foreign digital companies. I think we should look at these types of things.
In terms of an approach that would suit all of these newspapers well, as opposed to just straight subsidies, is there a comprehensive application that could be put in place that would serve your interests broadly? I am thinking of removing the tax incentive for foreign digital companies. Is there something else besides that we could apply?
Ms. Lauzon: It’s so diverse. We’re alike and yet so different. I think there won’t be a model that would fit all right now, if that’s your question.
However, what we have been working on — and if the people at Canadian Heritage would hear me, they would say, “There she goes again” — is a harmonized action plan with all the departments involved. In our brief we filed in 2016 during the official languages consultations, we talked to Revenue Canada, to Industry Canada and to departments which could be involved.
We’re asking the government — and, in our case, Canadian Heritage, because they’re responsible for the Official Languages Act — to bring those people to the same table, make a plan, get a role for everyone, and let’s make this work. We told Canadian Heritage to use us as a model, as a pilot, so it can be given to your sector or your sector, and get all the departments involved.
Right now, again, they’re working in silos, and they need to address each sector differently. There are ways to do it, and what’s very interesting — and we’re talking a lot to politicians about this — with money that already exists, not new money. That’s the beauty of it. If we were to have a recommendation at the consortium, it would be to say, “Please, sit with us, see what we can do working on a harmonized plan, getting a lot of departments involved, and work with the existing monies, existing envelopes. We have great ideas.” I’m sure they’ll be happy to hear it.
Mr. Saras: I want to add there is another difference. The prices the mainstream media are charging and the ethnic media are charging. A page in, say, The Toronto Star is going to cost $45,000 to $50,000; a page in one ethnic publication is going to cost $500. Therefore, if you are going to separate those things and see what kind of money you are going to give, we are always at the bottom. There is no way we can compete with any other publication.
At this point, of course, we are working with Canadian Heritage. I believe they try their best to help the situation. They understand. The problem with us is with Public Works Canada, which is handling the government advertisements. They have no idea what exactly the industry is because the four of us are representing an industry. My sector, his sector, their own sector. We are the Canadian industry, the printing industry. We cannot communicate even with them to explain what is going on. There are no rules on how those advertisements are going out and how they are going to be distributed.
Mr. Holmes: If I can just pick up on that, not only are there no rules, right now, there is a policy, and the policy is to go where they think they get the most bang for the buck, the biggest volume numbers. They will, just as many advertisers do, love the metrics they get. Whether 90 per cent of those metrics are fraud is another question. I have a perfect example here. We have, within our membership, a very strong and dynamic business-to-business and trade professional magazine sector. Right now, with the global marketplace and trade rules, at best, being shifting sands, with Brexit and with NAFTA being thrown into total disarray and uncertainty, our business media, now more than ever, has a critical role to play in serving and getting information, in a timely manner, that is very relevant to the business needs and to the people who make purchasing and business decisions for our industry.
When there was the softwood lumber dispute rearing its ugly head again recently, the government announced there would be a time-limited aid package to mills suffering as a result. I called up a couple of our members who basically own that space — they provide the only periodicals to that very specific sawmill industry — and said, “Have you received any inquiries? Have you been in contact with Public Works around advertising to provide information to your readers about this very important aid package because, frankly, Facebook is not going to deliver that message?” The answer was no.
[Translation]
Senator Boisvenu: First of all, welcome everyone, and thank you for the work you are doing.
I feel like this is Groundhog Day. We just finished a study on self-driving cars. We hear you speak, and we are under the impression that the media are going through the same thing as self-driving cars. The government is not ready, their actions are scattered, and the small players will disappear at the hands of the major international players.
I looked into lobbying in Ottawa. Google got 291 government contacts. A small business or small association could never do that.
We are at the heart of a revolution, the likes of which we have not seen since Gutenberg, and it has been evolving very quickly in the last 10 years. What I’m noticing is that there is no overall vision concerning taxation, funding for community organizations, and the distinction between the big and the little guys. It’s all kind of a mixed bag, and we do not know who will be putting their hands in it.
I sympathize with you. It is true that, in the regions, especially in the remote ones, your potential influence is very limited, compared to the major international players, because everything is now done on the Internet, on social media, and this leads us to question the future of small regional media. Mea culpa, mea culpa, mea maxima culpa, because I’m guilty of using social media so much more now, for both my professional and personal activities.
When I hear Mr. Saras tell us that he represents 800 media companies, and that the government has never done business with him, it is almost scandalous. You have the ethnic communities. We must not only reach out to the majority groups, but also to the small groups.
I do not have a question, but I think that we have quite a bit of work ahead of us, as a committee. I hope that the fact that we listened to you will allow us to make common sense recommendations that will lead the government to choose the course you want. I think that this challenge will span over 25 years. I hope that we will provide you with potential solutions so that you can survive, humanely and properly, in your regions.
Mr. Côté: I want to add a brief comment to what you just said. You spoke of a ten-year decline. Ten years ago, the federal government’s advertising budget was $120 million. This year, it is less than $40 million. You can see where this decline happened. That is what happened in the last ten years.
[English]
Mr. Saras: I am representing the new Canadians. An immigrant myself, a lawyer by education in my mother country, a journalist for 53 years in Canada, one thing I can say is there is enough money to help the industry. The industry is going through a difficult period right now, both in Quebec and the rest of Canada. I do believe the government has the ability and power to come up with a solution that is going to help the industry and everyone. Another thing is that I want to take this opportunity to ask the brothers and sisters from Quebec to join us in a national organization. I don’t understand why there should be an organization of Québécois and another organization for the rest of Canada. I’m sorry. I don’t want to create any negative impressions. But this is also a problem. There are immigrants in Quebec. They are publishing. There are immigrants in the rest of Canada. They are publishing. I believe that together we are going to gain more for the industry and the country. Thank you very much for your attention.
The Deputy Chair: Thank you.
Senator Mercer: I get the feeling the entire industry, not just the ethnic industry but the mainstream industry, is in deep trouble, and we’ve gotten into this problem. Is there a consolidation of resources in terms of printing?
Printing is an expensive part of the operation. It seems to me that some of the surviving mainstream media — I think of our daily newspaper in my hometown of Halifax — what they sell in the newspapers is not keeping them going. What is keeping them going is the huge print shop for advertising, for flyers, et cetera.
The newspaper is one thing. They are making money in the advertising of printing other things. They have consolidated. They bought up almost every other print shop in the province. Has that happened in the ethnic community? I recognize this is a big country so you can’t consolidate it all. I lived in the west end of Toronto for eight years and there were more ethnic newspapers than you can believe from French, Polish, Ukrainian Latvian, Lithuanian, Estonian; I remember all of them. Has there been a consolidation?
Mr. Saras: Right now, 287 publications are printed in Toronto in about 46 languages. Some of them are done overnight.
Senator Mercer: In how many print shops?
Mr. Saras: There are about 20 of them. The Vietnamese, the Koreans, and Hungarians have their own printing. We are splitting among them to see who has the better price and going there. To answer your question, there is no way that, say, the Sri Lankans and Tamils are going to go together to publish one publication.
Senator Mercer: I recognize some of the problems in the old country get in the way of cooperation in the new country. Having worked and lived in Toronto for eight years, I experienced that.
The other problem we have not talked about is how the ethnic media has been exploited by governments — I put an S on that. Next year, for example, in 2019, I think we can expect there can be more money spent in ethnic media because next year is an election year. I’m talking about government and I used to run a political party. I spent more money in an election year in ethnic media and that was natural. The government tends to spend more in election years and we have to find a way to even that out.
Have you been able to ascertain, through surveys or marketing strategies, the response to advertising in all of your media? What sells advertising is the fact that it works. Have you been able to measure that, from the government’s point of view, that government has advertised whatever and results have been —
Mr. Saras: Senator, to the best of my knowledge, the bureaucrats from each community are picking one publication which they support. Nobody knows the criteria for how they choose this publication. The rest are starving. Now the rest are complaining the government disregards them. They don’t pay attention.
We ask time and again that there should be some rules to know how this distribution of advertisements will be. Another thing is there are some private agencies outside the industry. They are approaching our members and say to them, “Give me 30 per cent of the price you are going to receive from running the ad and I’m going to bring you more.” Believe it or not, I’m independent, I never receive an advertisement. The guy next to me, because he’s with the agency, he receives all the advertisements but he pays 30 per cent. Of $1,000, you pay $300 and so on. This is a mystery. How can it be some of us are out and some of us are receiving?
There are certain things that have to be changed and the government has to take action.
The Deputy Chair: I would like to thank our guests very much. I appreciate the passion and the knowledge which you have imparted to us tonight. It has been very useful and very helpful in our deliberations. It is a difficult time and these are complex issues. You have shed light on many aspects. I’d like to thank you all.
Honourable senators, we will meet next Tuesday morning and we’re going to hear from News Media Canada, the National Campus and Community Radio Association and L’Alliance des producteurs francophones du Canada.
With that, I wish you a good evening.
(The committee adjourned.)