Thank you, Mr. Chair. Good morning, everyone. I hope you are hearing me okay.
One of my colleagues and I have undertaken a study whose main concern is Canadians' consumption of Canadian cultural products, more specifically in terms of journalism. I will try to put the issue of local and regional information in that context.
At local and regional levels, it seems to us that the challenges are very similar to those in large regions and on the national level. This comes with a number of challenges, which you are familiar with and which I will not dwell on.
The first challenge, of course, is the multitude of cultural products available to Canadians. That multitude leads to a splitting of audiences, a scattering of attention and a turmoil that force practically all the stakeholders to reposition themselves.
In that context, other phenomena change consumption habits, such as the invitation to the piecemeal consumption of television or audiovisual products. This is a “time budget”, or time spent on those types of activities when there is considerable demand for activities not directly related to cultural products, such as outdoor or tourism activities. We are also talking about financial budgets and the consumption of cultural products. The data shows that there has been a transfer toward distribution infrastructure—in other words, money people are likely to invest in it.
The second major challenge is the funding of those activities, especially during a transformation period when the players must invest substantially in innovations, be it for existing media, transfers or reorganizations. As they say, deep pockets are needed to survive periods that are not always profitable. Everyone has heard about the experiment the Gesca group has undertaken with La Presse +, without really knowing whether it would break even. The funding aspect is very important.
When it comes to journalistic information, there has been a change in context regarding distribution. Previously, that information was disseminated through media providing other content, virtual or symbolic. They may have included a recreational and entertainment aspect. There was also advertisement, of course. We are talking about a place of public expression, not only for organizations and institutions, but also, to a certain extent, for individuals. Yet everyone knows that those four parts of public expression, to put it that way, are slowly splitting up, and that this is causing all kinds of problems in terms of journalistic information.
As far as consumption goes, the rural/urban divide was also a major challenge. There have been population movements for a very long time, and they favour urbanisation. However, it seems that the arrival of the Internet and electronic infrastructure has lessened the divide between rural and urban areas and made it less drastic.
As for the media landscape, four main players are involved in local and regional information in the Quebec City region, for example. The Transcontinental company, which owns weekly newspapers, has become extremely important. It does its own digital transfers. Of course, those transfers involve some trial and error, but it is clear that the company wants to move on to multimedia in the subregions where its weekly newspapers are distributed.
The Quebec City region also has Quebecor, which is using MATV to try something that is between entertainment television and social television. We don't have an evaluation on that, but it seems that there are transformation periods every six months. There is a great deal of experimentation in this area, which is related to television.
In the Quebec City region, there are also existing community media, some of which play a role, not in terms of journalism training as such, but in terms of regional cultural production. I am thinking of the first community radio stations, such as CKRL, to name just one.
Of course, we have Radio-Canada, which also seems to be going through a period of accelerated downturn. In fact, its ability to produce regional and local news in the regions has greatly diminished. I would obviously add Le Journal de Québec and Le Soleil, which are periodically rebranding and are also experiencing downturn to a certain extent.
Another extremely important change has more to do with local and regional news than news in general, but in this case, new competition in the form of foreign distributors has had a significant impact. Our study was carried out to consider that issue. We wanted to determine how, in terms of daily consumption by Canadians, the transfer occurred between foreign products and local products.
You may say that the game has changed on the local level. All media used to really be part of a group. There was a dynamic, an interaction among media when it came to local and regional news. The situation could be compared to a chamber orchestra, which contains a limited number of instruments. Now, the orchestra is large, but there is no conductor. There are instruments—in other words, media—and some take leadership from time to time.
An entire dynamic, stemming from the splitting of the audience, has led the media to reposition themselves in relation to each other. In that context, traditional media such as Radio-Canada or Le Soleil get a lot of their content from social media, which in turn get their content mainly from websites, or individual, company or organization blogs.
The flow of information currently involves a lot of people. We are in a transition period where we are no longer sure who the main producers are in terms of daily regional information. That is a major challenge.
There is also an issue we are not really looking into—I'm talking about quality information compared with what could be considered as more unremarkable or fun information. That issue arises in the context of this dynamic of interactions, this game of the regional media orchestra. We are really facing a challenge.
In these conditions—and I will close with this—you may think of the crucial role Radio-Canada played during the interwar period. Radio-Canada was a very important factor in bringing Canadians together, be it in terms of infrastructure or content. There were exchanges between regions and so on. That role could be renewed, and Radio-Canada could again be something of a spine in this new context. It could be one of the main producers, but its internal operations, as well as its investments, would probably have to be reorganized.
The primary source of broadcast data in Canada is the CRTC. Reviewing its decisions shows that since 2000 it has approved far more than 50 changes in broadcast ownership, worth more than $13 billion.
Table 1 shows one outcome. In 2014 the five largest owners earned 82% of all radio and TV revenues.
Table 2 shows that of the 57 communities with private TV stations, 54 are served by one or more of the five largest TV broadcasters. Independent local TV stations operate in just 17 communities.
As ownership is consolidated, what has happened to local broadcast news?
Tables 3, 4, and 5 show that as TV ownership has concentrated, expenditures on local programming and local TV news decreased and staff have been cut.
Moving over to programming, table 6 sets out the CRTC's definitions of TV news. Radio news is not defined. The programming data that radio stations send the CRTC every month are shown in table 7, but as they do not identify any local news, the level of local news broadcast by radio stations is not known.
Table 8 summarizes a study that the forum undertook of local radio news, using CRTC decisions. In the 1980s, radio stations were broadcasting an average of 10.2 hours of news per week. In the 2000s, news stations were proposing 4.2 hours per week, or 58% less.
Table 9 shows the data that TV stations send the CRTC every month about their programming. Table 10 shows that some TV stations described programs produced outside their communities or by radio stations and counted these as original local TV news.
In our view, the CRTC TV log results concerning the level of local original news produced by TV stations are unreliable.
Table 11 compares TV stations' descriptions of their weekly local original news in 2000 with the CRTC's current requirements. The CRTC requires private TV stations to broadcast local programming but does not specify hours of local news or original local news. It dropped that requirement in 1999.
On January 25, last month, the CRTC discussed redefining local news. Its redefinition raises concerns, because as table 12 shows, talk shows, historical documentaries, and telethons would then count as local news, diluting the concept.
Table 13 lists the data that the CRTC collects from broadcasters about their annual operations. As it does not ask how many journalists they employ, their capacity to gather news is unknown. In general, it asks little about broadcasters' Internet news presence or its news resources online.
In brief, Mr. Chair, there are very few facts about Canadians' overall access to original local broadcast news concerning their communities or about stations' capacity to actually gather this news.
What ought to be done about local broadcast news?
The proposal now on the table is for another fund for local television news. The first was the small market local programming fund approved by the commission in 2003. Since 2013, the five largest broadcasters have received 16.8% of its funding. The CRTC approved the LPIF in 2009. The five largest TV broadcasters received 80% of that funding.
Last month, the commission was asked to establish a new local news fund. It would shift millions of dollars from cable and satellite subscribers who now support community channels to private television stations. The fund's impact on local TV news is unclear. BCE, for example, said it would not broadcast more local news even with this fund.
It's clear that the problem of local broadcast news has no easy answer. The elephant in the room is the major gaps in data about local broadcast programming, which make it impossible to know if Parliament's objectives for local broadcasting are being met or whether the consolidation of ownership has strengthened or weakened local broadcast news. The CRTC's routine destruction of its older records means that these gaps are growing. The forum's concern is that basing policies on assumptions instead of facts creates new risks. Policies may be seen as favouring some at the expense of others. They risk failure if they focus on the wrong problems.
We have three suggestions to put forward for you this morning.
First, Parliament needs facts, not guesswork. The CRTC should consult with the public in the next year to revise its data collection and reporting systems. As the head of CTV once told the CRTC, “You can't manage what you don't measure.”
Second, if Parliament wants Canadians to have access to broadcast news, there must be enforceable and enforced levels of original local news. The commission dropped such conditions in the early 1990s. It said competition would work just as well as regulation in ensuring Canadians' access to local broadcast content. Of course, in private TV, the number of competitors has fallen from 30 to 17.
Nearly all non-news local TV programs are gone, along with about 30% of TV station jobs. Central casting, whereby a remote production centre produces the local newscast and ships it back into the market, is ubiquitous. Some TV stations broadcast radio programming and claim it is news, and radio stations broadcast TV audio. While a survey found that 81% of Canadians said local television news is important, TV broadcasters say they can't afford to do it because they can't monetize it.
On February 1, the forum therefore asked the CRTC to restore conditions of licence for original local broadcast news for local television. That was the regulatory approach that was very effective from the 1970s to 1990. The panel's chair dismissed this concept as pure nostalgia. This was a bit odd, since on January 12 the CRTC denied requests from ethnic organizations for a public hearing into last May's cancellation by Rogers of all ethnic language TV newscasts for communities in Vancouver, Calgary, Edmonton, and Toronto, precisely because the CRTC had not set conditions for local newscasts in those licences.
If Parliament wants local broadcast news, the CRTC should be required to set conditions of licence for expenditures on, and hours of, original local radio and television news produced in, and predominantly about, the communities that those stations are licensed to serve. They can do that during the renewal of radio and TV licences over the next one to two years.
Third, Parliament ought to know if its objectives for its communications system are being met. The current statutes in the CRTC Act were written decades ago. They don't explain whether or how the CRTC should deal with the Internet or its ramifications or require the CRTC to serve the public interest.
Implementing the first recommendation, the one for better data, will position this committee for the next several years if it undertakes an examination of whether Canada's communications legislation should be updated for the twenty-first century.
Mr Chair, local radio and television stations obviously help you and you colleagues stay in touch with your communities and your constituents. They help you find out what's going on back home.
Some say we shouldn't worry about the changes happening in the media and that the Internet provides all kinds of different sources of information, but for the most part these sources are aggregators that are taking material produced by professional print and broadcast journalists.
The goal for your committee and for the commission should be to ensure that in this era of constant upheaval, we do not lose a vital component of Canadians' lives—the local news, which, as Walter Robinson of The Boston Globe Spotlight unit so eloquently put it, gives people the ability “to make thoughtful decisions in a democratic society.”
We welcome your questions when the other presenters are finished.
Thank you very much, Mr. Chair and members of the committee, for having me here today. It's a pleasure to come to talk to you about the state of the media landscape here in Canada, with some focus on the issue of media concentration.
I have four ideas that I want to share with you.
The first is that the overall media economy has grown enormously and become structurally much more diverse with the development of fundamentally new sectors over the last 20 to 30 years. This comes with both a great deal of promise, but also with significant perils.
Second, media concentration remains astonishingly high around the world, and Canada is no exception.
Third, emergent media do not replace traditional media, but they are important and they interact with them in complex ways that we'll talk about.
Fourth, I will finish with a half a dozen proposals about what might be done.
First of all, I do research at the Canadian Media Concentration Research project, which that I direct, and I'd invite you all to take a look at the reports we put out on an annual basis for a full explanation of some of the things I'm going to discuss today. My primary interest is in doing two things. One is mapping the growth and development of the media economy in Canada over a 30-year period, and the second is mapping the developments in concentration over the same period and asking a simple question: are media becoming more or less concentrated?
I do so because, sharing with Monica and Mr. MacKay, I know the problem with data is severe in this country. We also have a lot of people with a lot of opinions and little data to act upon. I think it's important that we do good research and have a solid base of evidence on which to draw.
I think it's important to talk about how I define the media, because I do not define the media in a narrow way, in a separate, silo-segmented way; I define the media expansively to include all of its component parts. I deal with each of the component parts separately, and then I combine them in what I call the scaffolding approach so I can get a view of the whole.
When I talk about the media, I'm talking about everything from cellphones to plain old telephone service to Internet access to cable television to broadcast TV, as well as pay television, newspapers, radio, magazines, search engines, social media sites, Internet news sources, browsers, and operating systems. We need to look at the entire universe, because increasingly all these components interact with one another, and we cannot deal with them adequately separately.
What do we know? We know a couple of things. We know that media have expanded greatly over the last 30 years from about $19 billion in total value in 1984 to over $75 billion in 2014, the last year for which a full set of data is available.
Some media are growing fast; others are stagnating, others are in decline, and yet others are being remade and are recovering. The music industry is the poster child of the last type.
We've seen the rise of fundamentally new media, especially cellphone service, Internet access, Internet news, and search engines. The rapid expansion of the pay television universe is another thing to remark upon.
Revenues are up greatly for the cellphone industries, Internet access, Internet Protocol TV, Internet advertising, pay and specialty TV, and television overall.
Some areas have stayed flat. Radio and cable television, in the last couple of years, are those types. Some are in significant decline. Newspapers, magazines, and broadcast TV are those types. Music, as I said, is in recovery mode.
The growth of the network media economy since 2008 has been slow and sluggish, reflecting the overall economic conditions of our time.
I think one of the things we can take away from the general description I've just given you is that in the new media environment it's not content that is king, but connectivity that made be emperor. This is significant for policy discussions.
We live in an age of information abundance, not scarcity. There are 695 TV channels in Canada, 1,100 radio stations, and 92 paid daily newspapers. Expert blogs abound. Most Canadians have a smart phone. One hundred hours of video are uploaded to YouTube every minute. About three million Netflix subscribers were in Canada in 2014, and some estimate the number is about four million today. About 18 million are subscribers or users of Facebook.
What do people do with the media they have at their disposal?
Well, Canadians have long used a wide variety of media very extensively by international standards. That's been the case since plain old telephone service in the early 20th century, and it remains the case today with smart phones and the Internet.
As I said earlier, most growth in the media has been in connectivity, not in content. Consuming old media still occurs. People are still watching TV. People are still watching movies. People are still reading the newspapers a great deal. People are still listening to music. However, they are doing it on their smart phones, on their laptops, on their desktops, in their bedrooms with the big screen TV. They're doing it in the movie theatres and so on and so forth. What we have is the same media, but they've been detached from the traditional delivery vehicles and now are being circulated across an expanding array of delivery devices.
When we look at what people are doing, we see that youth are not so much disconnected from the news as they are connected with it in different ways, and the types of news are perhaps not the kind that senior folks like ourselves would like to see. It's more lifestyle news and personal news that they can use. There are issues there. They are also getting their news via Facebook, Twitter, Reddit, and Google. These sources bring people to the news in droves, but engagement is fleeting, shallow, and not easy to monetize.
What could possibly be wrong in this scenario? There are several things that stand out.
One, access to the Internet, to mobile phones, and to other media is far from being universal. One in five Canadians does not have a cellphone or an Internet connection from home. The connection between income and access is strong. For people in the bottom income quintile, around one-third do not have access to a cellphone, and just over half, about 56%, have access to Internet at home. If you look at the top income quintile, everybody has both. It's income inequality.
Advertising-dependent media are in big trouble right now, and this is due to a number of factors that we'll talk about. We see the closure of nine daily newspapers since 2008, and 13 free daily newspapers, and 16 newspapers have scaled back their publishing schedule. Four TV stations have closed. This is not a good-news story for the real engines of the news environment.
Third, Facebook's average revenue per user in 2014 was $28 for the entire year. A Globe and Mail subscription is a little over $500. We can see the difference here in the scale of resources. They're not bringing a very big scale.
Now, the big point that I want to make today is that concentration in Canada is very high in most media sectors, although this is not uniformly the case, and I'll point to some of those later. In many media sectors, concentration levels are very high. Across the media as a whole, concentration levels are very high, and this is high by Canadian historical standards, high by international standards, high by empirical measures that are commonly used to assess the state of competition and concentration.
Vertical integration in Canada is enormously high and unusual by world standards, and it has doubled between 2008 and 2013 and remains at that level today. The top four media conglomerates in this country combine telecommunications, a wide variety of television assets, and in some cases newspaper assets and Internet access. They are Bell, Shaw, Rogers, and Quebecor. Between these four companies they own about 60% of the overall media universe. The trend has strongly been up. We have a bigger media pie but a smaller number of players controlling a bigger stake of that media pie. By controlling both the access pipes and the content, they're fundamentally shaping the way in which the overall media universe is unfolding today.
If we look at the evidence, what we find is that we have, as I said, some areas where things are okay. What are those areas? Radio is not very concentrated at all. Magazines are not very concentrated at all. Internet news is the bright light on the horizon. The sources that Canadians go to are a wide plurality of domestic, traditional, and new and foreign websites, and the trend is towards greater diversity, not less.
Where is concentration a problem? Moderate levels of concentration exist in newspapers, and concentration has taken a very significant jump upward with the recent acquisition of the Sun papers by Postmedia. This was a very significant transaction. It bumped up levels of concentration a great deal. Television concentration levels are very high overall. Cable and satellite television concentration levels are moderately high.
In the highly concentrated area we have broadcast TV, pay TV, and to show you that the Internet is not immune from concentration issues, let me point to the following that have the highest levels of concentration across the entire media environment.
I'll start by saying I'm very, very skeptical of subsidies. The idea, to my mind, of putting any kind of a tax on Internet service providers or the pipes' owners to fund content is a non-starter, and should be a non-starter. It should be stillborn.
Part of the problem with the Canadian system is the idea that we think about it as a system, as opposed to a set of, let's say, Lego building blocks that we snap together in a variety of pieces to create things that reflect our desires and our wants. By thinking about things in terms of a system, we've created a dark, opaque labyrinth of slush funds that go from one pocket to another with regulatory blessing. I don't think this helps us out at all.
The subsidies that we do have are actually quite generous, over and above what we give to the CBC each year, which I believe should be strongly funded. I believe it's correct to restore the funding that it has lost. I believe the CBC has a core mission to play. However, over and above the CBC funding, I calculated in a rather rough and ready way, for a presentation a month or two ago, the subsidies that we give to the Canada Media Fund, the Canada Periodical Fund, and the music and sound recording industries, and it's about $800 million.
In my view, we ought to remove each one of those little pockets of money—and let me be a little bit hyperbolic here—that have their cesspool of industry insiders and supplicants lining up at the trough and consolidate the funds into something that we call a general media and cultural fund. We take it out of the hands of the broadcasters. We take it out of the hands of the BDUs, the cable companies. They play no role in funding it, they play no role in administering it, and they play no role in taking any of the funds out of it.
As Monica pointed out, a significant slice of the funds for the local program improvement funds went right back to the large conglomerates who, in my view, have been putting these broadcasting entities in a very precarious spot because of foolish consolidation decisions and a field of dreams vision that they started at the end of the 1990s with convergence and the dot-com era. We need to stop that, and we by no means should be giving them any subsidies whatsoever.
I think we should keep the subsidies that we have because we have to recognize—and we do recognize this through the entire institution of intellectual property law—that information and news are a public good. The general public has never, ever paid the full freight for news anywhere in the world, in the past or today. The only people who have paid the full freight for the news have been financial traders and rich merchants who want to trade on advantages in time, secrecy, and exclusivity. For everybody else—for the general population, and as a way of bootstrapping people into the role of citizens in a democracy—we have had a range of subsidies.
There are three sources of subsidies. There are advertising subsidies. We are seeing that those are in difficulty right now. There are government subsidies, and we have a significant number of them in Canada. I believe that is a good thing, but we ought to consolidate them. Lastly, we have rich patrons; that could be fine too, but we need to do something with consolidation.
I have one last point. We also have to recognize—and maybe later we can get into it—that there is some good stuff going on too in terms of some of the new journalism that is emerging.
The four that I lay out are, first, those who think that the sky is falling continuously, the Cassandras, who say that media concentration is bad, it's going from bad to worse, and democracy is on edge basically forever. That has been going on since I started studying, so that's 35 years.
There are the Cassandras, and then there are the others, the ostriches, the ones who think things are better than ever. It's all sunny skies, and how could we ever have anything better than what we have today? We live in an environment of information abundance, they say, and people who are thinking about media concentration in the age of Internet are a bunch of dinosaurs.
We have the Cassandras and the ostriches, and then we have the number-grinders, those who try to bury their heads in a mountain of data to try to establish a straight-line connection between who owns the media and a reflection of political ideology or bias in the output. You can't do that. You can't have single causal relationships in a complex institutional environment like this. That's a fool's errand. The best research in this country by Colette Brin, Soderlund, and Hildebrandt comes to the same conclusion that other good researchers around the world have reached, which is that the evidence is mixed and inconclusive when you try to look at this kind of thing.
Then there's a fourth perspective, which tries to cobble together the good things from other places, and it's my perspective, I suppose. I draw on some others that I've learned from over the years. This perspective is that societies from time immemorial have oscillated between openings in communication and closures in communication, and it's hubristic to think of our times as somehow exceptional and that the forces of consolidation, concentration, and control have somehow vanished from the scene as if they're an extinct species. I don't believe that's the case. I believe that we need to take very strong preventive measures to ensure we have all the conditions possible that are most likely to lead to the most democratic media system possible.
That means adopting strong structural measures, including preventing media concentration, making sure the pipes are open and act as carriers rather than editors, and making sure we have adequate resources. That is most likely to produce a media environment that is conducive to a democratic system. We should minimize, therefore, any kind of content regulation or behavioural regulation.
I appreciate being able to sub in today for Mr. Van Loan. I spent 20 years in the community newspaper industry, and I am very interested in being a part of this discussion.
I want to change tactics a little and speak to Mr. Demers, but before I do, Mr. Winseck, I was really happy to hear you say that don't support additional subsidies in this industry. Everybody I've spoken with in the newspaper industry agrees with that. However, you did say that you agree with additional funding for CBC. That is a subsidy.
Voices: Oh, oh!
Mr. John Barlow: They're given a $1.5-billion subsidy annually. I think it's important for them to come to a realistic cost structure for that industry to move forward. We're asking them to be a little more self-sufficient. At CKUA radio and places like that, they have to raise funds on their own if they want to do those things. I just wanted to clarify that.
Mr. Demers, you were talking about community newspapers. I know that you're specifically in Quebec, but in my experience, here's one of the biggest issues that community newspapers have been facing. They've been relatively successful because of their hyper-local mentality, right? If you're in a small community, the only place you're going to get that news is in the community newspaper. However, have you done any research on the cost of Canada Post? Has anybody else? Has Mr. MacKay or Monica?
For example, more than half the budget of the average community newspaper is for the delivery of the newspaper through Canada Post. Costs have continued to go up. Canada Post no longer allows community newspapers to be delivered as second class mail. If they're addressed, they have to be first-class mail. If they could reduce their costs for Canada Post, if newspapers could be addressed but be considered second class mail, that would save them hundreds of thousands of dollars a year. I'm wondering if you've done any work on that.
I haven't fleshed it out yet, but the idea of a Canadian Communication Corporation has a nice ring to it. It's this idea of using the postal system as a general purpose delivery network.
That was the case with the United States post office from its inception in 1792 all the way through into the 20th century. Some people have done analyses and suggest that the level of subsidies in current dollars was in the billions of dollars per year. One telling sign was that 95% of the weight of the postal delivery system was occupied by newspapers, but they accounted for just 5% of the revenues. It was a huge subsidy given by the United States government under the guise of the free press because it wanted to cultivate a vibrant press. What it did was give these enormous subsidies to the press by way of a general delivery platform.
What I'm thinking is that somehow we try to update that through the century that has passed and see if there's anything we can think about with respect to that today. We have post offices throughout this country, so let's put wireless masts on top of all the post offices. The post office could be a kiosk for getting your cellphones. The post office has a culture of being a common carrier. The idea is that you would have structural separation between the CBC, with the content side of it, and the delivery side of it. It would be similar to what I described with the structural separation in the vertically integrated private companies. It could be something like that.
One thing I've heard a couple of times here is that Winseck is against subsidies. I don't want to say I'm against subsidies. I want to make it very clear that I'm squarely behind subsidies for the CBC and for the general purpose content fund. This is because news is a public good.
I tried to make that point clearly. This is not Dwayne Winseck believing in some fantasy land that news is a public good because I think people should eat their kale. From an economic point of view, news is a public good and has never been solved with a market solution, except for a small slice, as I said, of financial traders and merchants who want to trade on the advantages of time, secrecy, and exclusive access. For everybody else it has been subsidized.
You can pick your subsidiser. Do you want a rich patron to do it? What's the cost? Do you want government to do it? What's the cost? Do you want advertisers to do it? What's the cost? There's no free lunch.
You have to recognize that news is not a normal economic good. The whole institution of copyright is predicated on this. We created a whole body of law to deal with one specific kind of property—information and news—because it doesn't conform to the other kinds of property that we have. It's all about balancing. All of those balances are just social settlements that are subject to change over time. That's what we need to do today. We need to bite the bullet, realize that we need to have subsidies, and who's going to get them and who's not.
I'm trying to say that we should not give subsidies to those who have blown up the system. We should not channel subsidies through an opaque labyrinth, as we've done throughout the last half-century. We should not allow the existing commercial players to be both the suppliers of the subsidies, the administrators of the subsidies, and the beneficiaries of those subsidies. It's riven with conflict of interest that is self-evident to anybody who asks or who looks at the evidence honestly.