Peter Menzies: The last days of media subsidies

Regardless of who wins, neither the CBC nor the private media can expect subsidies to continue indefinitely.

By: Peter Menzies

When this election is over, one way or another, Canadians will be sitting down for a fatherly chat with their newly elected leader in which they will learn what a mess the country is in — and why some tough decisions are coming their way.

They’ll discover that economies can’t, after all, be built “from the heart out,” as former prime minister Justin Trudeau believed. They’ll learn that budgets don’t balance themselves; that now is always a good time to think about monetary policy; and pipelines aren’t the tools of Satan. They will be informed that the “sunny ways” view of the world as one big Willy Wonka Chocolate Factory has so debilitated the nation’s industrial and intellectual infrastructure that we will all have to pull together and pay more for less.

In other words, suffer.

None of that will be fun. None of it will be good news for a media ecosystem that effectively conned Trudeau into providing it with hundreds of millions of dollars in subsidies.

Then there’s the CBC, awkwardly covering an election that involves Conservative leader Pierre Poilievre’s vow to “defund” it.

And, given Liberal leader Mark Carney’s eerie resemblance to Ernest Manning and his oh-so-conservative talk of old-fashioned values like fiscal prudence, innovation and entrepreneurship, it seems unlikely the CBC will benefit from outgoing Heritage Minister Pascale St-Onge’s plan to add another $1.1 billion to its core funding. Nor is it guaranteed that funding for news organizations will continue.

So when the dust settles on this election — the first in the nation’s history in which most journalists covering it may have their jobs at stake — our government is going to have to come up with a new plan for the news industry.

In a policy paper published by the Macdonald-Laurier Institute (MLI) last week, I laid out where I think our next government needs to go in order to restore public trust in media and break the increasingly creepy codependence (exquisitely detailed here by MLI Senior Fellow Dave Snow) between publishers and politicians.

It’s not possible to completely detail a 10,000-word paper in a single commentary, but what’s clear is that you cannot deal with the CBC without contemplating its impact on the entire news industry ecosystem. So here’s what my paper, entitled Changing the Channel — a bold new vision for a subscription-based CBC, proposes:

As a news service, CBC North, for national security, sovereignty and other reasons, needs to be retained and funded by Parliament. It is a vast region with immense strategic value, and yet is so thinly populated that market forces cannot be expected to meet its demands.

Radio-Canada, the francophone service, is popular and, for national unity reasons, should — at least for the time being — also be funded publicly. It must, though, be refocused on being a truly national broadcaster so that if I am watching its news in Saskatoon, I actually have some idea of what’s happened in Saskatchewan. It should also be equipped to accept donations and subscriptions in the years ahead. And its online news should be accessible through auto-translate tools.

The rubber really hits the road in the anglophone market. Here, the CBC’s $1.4 billion annual subsidy perverts the media ecosystem. It’s not the industry’s only challenge but the CBC severely handicaps other news providers so that now, with very few exceptions (The Line is one), they too must compete for government funding in order to catch up to other subsidized outlets.

While this keeps media solvent, it is eroding public trust in journalism. And if journalism can’t be trusted due to subsidies, it’s difficult to understand what value is achieved by subsidizing it — at least if the goal is to equip Canadians with a shared set of trusted facts around which they can organize their lives.

So, with that in mind, all direct news industry subsidies should be discontinued and replaced with tax deductions for those who pay for news. CBC should transition into a new English-language news provider eventually funded entirely by subscriptions and donations.

Canada has approximately 15 million homes, the overwhelming majority of which speak English. There are many ways you can play with these numbers but I used 15 million homes multiplied by a monthly subscription of $30 to determine a market potential of $5.4 billion in funding. I then noted that if even only 10 percent subscribed, this new news entity would have annual revenue of $540 million. You can eliminate francophone homes from the equation if you like and change the fee to $20 a month and you still only require a small minority of Canadians to supply what should be needed. This should have a knock-on effect that pushes other news providers to embrace subscription models which means, yes, people — not governments — pay for the news.

Furthermore, if the cost of a subscription is made tax deductible (max $1,000 annually), the net cost to the consumer drops even lower. CBC would compete with other news providers for readers’ loyalty; private outlets would face less pressure to compete for subsidies. This could break the bond between publishers and politicians. The wounds subsidies have inflicted on the media’s credibility could begin to heal.

These are suggestions that, so far, have cost me most of my friendships at the CBC. But the truth is that the sparsely-populated Canada the CBC was initially created to serve only still exists in the North, the corporation has lost much of the public’s loyalty and the internet has radically changed everything about how we communicate. We can only adapt to those stark realities by embracing bold visions for change. This one deserves a shot.

Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, past vice-chair of the CRTC and a former newspaper publisher.

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