Full text: News Media Canada’s submission to the House of Commons Standing Committee on Canadian Heritage

Last Friday, News Media Canada president and CEO Paul Deegan testified before the House of Commons Standing Committee on Canadian Heritage to voice the association’s support for Bill C-18, the Online News Act.

Below is Deegan’s full comments and responses to important questions raised by MPs sitting on the committee:

Good afternoon. On behalf of News Media Canada, our member publishers, and the 3000 journalists we employ, who inform Canadians across the country every day, we are pleased to participate in your study of C-18, the Online News Act.

During the 2021 federal election campaign, the Liberals, the Conservatives and New Democrats all made commitments to introduce news remuneration legislation.

Why do we need this legislation?

First, the need for strong, independent local news has never been higher – it keeps communities connected and informed on issues that are impacting them directly. Covering city hall, provincial and territorial legislatures, our courts, and indeed holding our parliamentarians to account is vital to our democracy.

We asked Pollara, a leading research firm, to ask Canadians what they thought. 90 per cent of respondents said they believe it’s important that local media outlets survive, and 80 per cent said legislation was needed.

And for news organizations to survive, they must be commercially viable.

Second, there is a significant imbalance of power between tech giants and Canadian news outlets. To put this in perspective, the market capitalization of Google is about $1.8 trillion; Meta is over $500 billion. Together, that’s in the ballpark the GDP of Canada.

Together, these companies take of online ad revenues stands at more than 80 per cent.

Third, with the prospect of legislation and in an attempt to thwart it, Google and Meta started picking winners and losers. They negotiated content licensing agreements with a dozen or so publishers, including Le Devoir, The Globe and Mail and Toronto Star. More recently, Google signed a deal with Postmedia.

Don’t get us wrong. We’re happy for those publishers. They should be getting compensated for their content. But we now have a situation of haves and have nots among Canada’s news publishers. And that’s not fair – especially to smaller publishers who have been left out in the cold.  

Let me outline three reasons why we support this legislation.

First, it allows us to negotiate collectively. Currently, the Competition Act bars us from forming a collective. Given the overwhelming power imbalance, we will be in a stronger bargaining position if we stand together.

Second, it includes an enforcement mechanism. Baseball-style final offer arbitration ensures that parties put their best offer forward and the arbitrator picks one or the other. The hammer of arbitration incents both sides to reach a fair settlement on their own. 

Third, similar legislation in Australia is working. According to a report by Rod Sims, the former chair of the Australian Competition & Consumer Commission, the amounts paid to news organizations were over $200 million. More important than how much is who reached content licensing agreements.

Sure, large news organizations in Australia benefitted the most on a total dollar basis. That’s understandable given that Australia has one of the most concentrated news publishing markets in the world. But others like Country Press Australia, an affiliation of 160 smaller regional newspapers, were able to reach settlements with Google and Meta. More recently, a group of 24 small Australian publishers reached a deal with Google.

In an article written by Bill Grueskin of Columbia Journalism School, he refers to a journalism professor in Sydney, “she can’t persuade many students to take internships these days because it’s so easy for them to land full-time jobs—and that change coincides with the gusher of code money: “I swear to God, I have not seen it like this in twenty years.” 

Before we take your questions, we would like to outline our approach to collective negotiation with web giants.

As a matter of principle, we believe that publishers large and small should benefit equally from any settlement – based on their proportionate investment in newsroom employees.

We have developed an approach that we believe is transparent and fair to members of News Media Canada and the National Ethnic Press and Media Council who wish to participate.

Simply put, any settlements from collective negotiation would be shared among publishers on a pro rata basis – based on their total salaries and wages paid to eligible newsroom employees – less expenses associated with collective negotiation.

In conclusion, Google and Meta have roles to play in the news media ecosystem going forward. It is in their self-interest to have rich, trusted content that our journalists produce. At the same time, they enjoy a dominant position in the marketplace, where search and social engines are designed to keep the user within a walled garden and extract value from content. We simply want fair value for that content, so we can stop the bleeding and reinvest in our newsrooms.

Questions and answers:

Mr. Anthony HousefatherMr. Deegan, do you think this will compromise the independence of all the people affiliated with the post media?Mr. Paul Deegan: Not at all, no more than General Motors would run an ad in the Globe and Mail or the Toronto Star. If someone from GM phoned up the Globe and Mail and said “Hey, I don’t like your coverage. I’m going to pull my advertising”, I think the publisher would tell him to go take a hike.

M. Martin ChampouxJe peux vous le confirmer. Je représente une région où on a un hebdo qui est très vigoureux, qui est L’Express à Drummondville, et les gens en sont friands. Je ne sais pas ce qu’on ferait pour la couverture journalistique locale si on n’avait pas notre hebdo, alors je pense que cela représente effectivement une volonté.D’après vous, et je pourrais poser la même question à Hebdos Québec, mais est-ce que les plus petits joueurs des médias écrits, des hebdos particulièrement du Québec et du Canada, vont être en mesure de tirer leur épingle du jeu individuellement? Ou avez-vous l’intention contraire de vous former en coalition pour avoir un bloc de négociation plus fort quand viendra le temps de négocier avec les géants du Web? Comment entrevoyez-vous la négociation?M. Paul Deegan: Nous voulons avoir un collectif avec tous les journaux du Canada, les gros, les moyens et les petits. Au Québec c’est intéressant avecLa Presse, avec le chef de direction Pierre-Elliott Levasseur.La Presse est l’un des grands innovateurs en Amérique du Nord avec leur tablettes. Je pense que c’est très important pour les médias du Québec d’être dans un collectif. Nous avons parlé, par exemple, avec quelques compagnies qui ne font pas partie de Médias d’Infos Canada, comme Québecor. C’est très important pour Québecor, La Presse, Le Devoir et les hebdos d’être dans un collectif, parce que nous sommes plus fort quand nous sommes ensemble.

Mr. Anthony HousefatherMr. Deegan, do you think this bill is about journalism?Mr. Paul Deegan: Yes, and one thing I’d like to pick up on is Dr. Geist referred to the QCJO, saying there’s nothing about journalism in here. He might want to read section 27(1)(a), which refers to a qualified Canadian journalism organization as defined in subsection 248(1) of the Income Tax Act. It’s right in the legislation, Dr. Geist.

M. Martin ChampouxCela est très bon.Monsieur Deegan, il y a un sondage qui a été fait par la firme Pollara Strategic Insights qui dit que 90 % des Canadiens estiment qu’il faut faire quelque chose pour la survie des médias locaux et 79 % sont d’accord pour que les géants du Web partagent leurs revenus avec les médias écrits et les médias locaux. C’est 80 % qui sont d’accord avec l’esprit de ce projet de loi. Est-ce que vous pensez que ces gens sont bien informée?Mr. Paul Deegan: Absolutely.Ils sont très bien informés. Nous avons posé la question à des gens libéraux, du Bloc, conservateurs et néo-démocrates. Tous les répondants pensent que le journalisme local est très important et qu’il faut de la législation pour aider le journalisme.
Mr. Kevin Waugh: One of the things that I witnessed is CBC is pilfering talent from the newspapers across this country. It’s going to continue with this bill. I’m going to tell you right now. If you don’t think CBC, which develops little or no talent on their own because they just pilfer from mid to lower newspapers in this country. That is an issue that this bill is going to deal with.I guess I’m going to start with News Media.Mr. Deegan, I know my statement is correct. I’ve seen it. It’s going to continue. With this bill going through it will continue even more. We are going to get reporters with little or no experience put in rural Canada because there are no reporters.Your thoughts on this.Mr. Paul Deegan: Listen, I agree with you. It’s a huge problem with the CBC in terms of pilfering talent. Local papers develop talent. Your own background, you know this first hand. Then they take them. They are making far more money with the CBC. It’s a big issue.That’s why it’s important that we have I think this legislation. It will get us on a more firm commercial footing. The one thing that I would ask you as members of the committee to look at—I know it was in the Liberal platform last summer during the election campaign—is to cut-off advertising for CBC during their news and current affairs programs. We’re competing with them head to head. They already have a $1.4 billion leg up on us and we’re competing with them for advertising. That’s not fair. That’s not right.Don’t get me wrong. There’s a place for the public broadcaster in Canada. They do exceptional work. But they shouldn’t be competing with private enterprises for commercial advertising.