BY SERGE LAVOIE, CCNA EXECUTIVE DIRECTOR
DECEMBER, 2000
Managing a subsidy program is not easy; someone is always on the wrong side of the criteria, someone is always pushing the envelope, and sometimes the criteria are just plain wrong or unfair.
Our industry is currently dealing with the reality of these concerns as it studies the effect of guidelines associated with the Publications Assistance Program (PAP). Almost 400 weeklies share an estimated subsidy pot of $9 million (about 20 per cent of the entire PAP program, which also includes magazines and commercial newsletters).
The history of the subsidy is long and convoluted. In brief, some form of reduced postal rate for publications has been around since Confederation. The cost was buried somewhere in subsidy provided to the post office. When Canada Post began preparing itself for crown corporation status, the true cost of a publication program was determined and this cost was charged to whatever government ministry was responsible for culture. By the early 90s, the program was substantially reduced (Book Rate was eliminated, for instance) although still administered by Canada Post. In 1997, an international trade ruling forced a transfer of the program to the Department of Canadian Heritage and required a new accounting system.
Which brings us to the present. The PAP for community newspapers is a variation of the program for magazines and in fact when you read the overall guidelines you get a clear sense that community newspapers were an afterthought. There is a clear need for a thorough review of the program, a fact recognized as much by the Department of Heritage as by community newspapers.
There is no reason to believe that the program is in any imminent danger of being cancelled (although a change of government or of government direction could alter that belief at any time). The program has finite resources, however. There is no evidence that department officials are looking to make a case for increasing available funds anytime soon. This means that the true value of the program is being eroded by cost escalations and an increase in the number of participants.
This zero-sum game means that eligibility criteria become very important. That explains why the ministry switched to a system of mandatory annual renewal for all participants in the program. Officials are looking for instances where newspapers no longer meet the guidelines.
Two problems have arisen because of this. Not all participants have been sticking to the criteria, largely because no one was enforcing them. More important, however, is the fact that the criteria don’t fit our business very well and are thus difficult to enforce.
The program objectives for the PAP as concerns community newspapers are pretty simple: “To recognize the important role played by small community weekly newspapers in rural communities by ensuring that they continue to be accessible to their readers.” Simple, yes – but how clear? How do you define small? Community? Rural?
The current criteria attempt to do that by imposing limits on population size or circulation size. To qualify, a publication must operate from a community of less than 10,000 and have paid circulation of less than 10,000. These are the only criteria that deal with defining small, community, or rural. Poor pity the paper in a community with a population of 10,065. There is one, and that paper is no longer in the program. Poor pity the papers operating in recently amalgamated communities or “mega-cities.” At the next census there will no longer be data proving that their community has less than a population of 10,000.
Somewhat inexplicably, the criteria also set an ad to editorial ratio of 70:30 and include in this ratio all preprinted inserts for which some consideration is paid. This one is more complicated. The 70:30 ratio exists in the Canada Post guidelines for inclusion in Publications Mail. That’s fine when we’re dealing with ROP advertising, but the industry’s business model quickly being forced to come to terms with the huge increase in preprinted flyers as the ad medium of choice.
I believe Canada Post has its own motives for the 70:30 rule. Even though they get paid for every additional gram of weight, it’s clear that the corporation would rather deal directly with the retail client involved. Canada Post simply wants to be in the flyer business.
The situation is more complicated with PAP. The subsidy is applied to all eligible papers whether they are 24-page papers weighing in at 65 grams, or 24-page papers plus inserts weighing in at 750 grams. Don’t laugh – they exist – and every gram of that larger paper is fully subsidized by PAP. This situation leads to the obvious question often asked by program officials: does the PAP exist to subsidize the delivery of Zellers flyers?
These are thorny issues indeed. In any give market it’s possible to have a Zellers flyer distributed through a subsidized paper, a Saan flyer distributed through a controlled circulation paper receiving no subsidy but paying full rate to Canada Post, and a Canadian Tire flyer distributed through a private carrier system. Anyone want to argue that’s a level playing field?
The reality is that our industry will have to grapple with these issues as it works with PAP officials on a new set of criteria. The consultation and negotiation process has begun. CCNA has a committee working on the issue. The status quo is no longer viable. Yet the subsidy program is absolutely vital to a large number of our members.
Got any solutions? I’d sure like to hear them.
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