The Washington PostDemocracy Dies in Darkness

Canada plans hefty aid package for its struggling media sector. Not everyone is pleased.

OTTAWA — Prime Minister Justin Trudeau’s government is planning a large infusion of tax breaks and cash into Canada’s beleaguered news business, a move that it says is aimed at saving independent journalism. But critics say the money will do just the opposite and make journalists and media owners beholden to the state.

The announcement, included in a fall budget statement last week, calls for providing $595 million (in Canadian dollars) over five years to support news outlets through measures such as tax breaks for hiring news personnel, the granting of tax-exempt status to nonprofit news organizations and a tax credit for subscribers to Canadian digital news services.

“Canadians have a right to a wide range of independent news sources that they can trust and government has a responsibility to ensure that Canadians have access to these kinds of news sources,” Finance Minister Bill Morneau said in the economic document.

Newspaper owners and journalist groups welcomed the news, saying it will throw the struggling industry a lifeline amid the continued flow of ad revenue to the likes of Google and Facebook and give traditional media a chance to migrate to new digital platforms.

But others accuse the government of a less noble motive. Conservative member of Parliament Pierre Poilievre alleged that the proposed subsidies are a giant “slush fund” aimed at buying the support of journalists and ensuring the reelection of Trudeau’s Liberal government next year.

Fellow Conservative lawmaker Peter Kent, a former broadcast journalist, added, “When the media … or individual journalist jobs are dependent on government subsidies, that is the antithesis of a free and independent press.”

The Canadian government has long provided indirect support to journalism through its backing of the Canadian Broadcasting Corp., which has a large news operation, and the government uses tax incentives to encourage Canadian ownership of newspapers. But the latest measures would directly finance news operations at private and nonprofit media at an unprecedented level.

Like the press in the United States, newspapers in Canada are in trouble. Both daily and weekly papers are closing, and those that remain operational have slashed the number of employees. Postmedia, Canada’s largest newspaper chain, recently reported another annual loss as revenue shrank by 10 percent, including a 17 percent decline in print ad sales.

Postmedia, which owns publications such as the Montreal Gazette and the Vancouver Sun, has been laying off employees, selling real estate and closing papers in a desperate effort to stay alive as its staff count has fallen to fewer than 3,000 from 5,400 just eight years ago. Paul Godfrey, Postmedia’s president, welcomed the government’s move, saying it will help the company’s ongoing digital transformation. “The chances (of success) have improved dramatically on the announcement,” he told Bloomberg News.

Although details of the proposed measures are still to be worked out, the government said the intent is for the eligible media outlets to maintain an arm’s length from government and focus on the creation of original news content.

One measure would allow nonprofit journalism organizations to be viewed as charities, which would offer tax breaks to donors for contributions. La Presse, Canada’s biggest French-language daily, recently transformed itself into a nonprofit in anticipation of the change after its longtime owner, Power Corp. of Canada, decided to get out of the media business after a costly digital transformation of the newspaper failed to stanch losses.

The government also plans to introduce a tax credit for qualifying news organizations to support labor costs associated with producing original news content. The government said it will set up an independent panel of journalists to define eligibility for the tax credit. The government also plans to introduce a “temporary” 15 percent tax credit for subscribers to eligible digital news products, effectively a subsidy for readers.

Andrew Coyne, a columnist at the National Post, said that the aid package will “irrevocably politicize” the news media and that journalists will no longer be able to lecture politicians who take money from corporations and special interests. “We will have to shut up about that now, as we will have to shut up about the bailouts of other industries and handouts to interest groups,” Coyne wrote. “We simply will have no standing to object to any of it.”

But Edward Greenspon, president of the Public Policy Forum, a think tank that produced a report in 2017 calling for a similar aid package, said these concerns are overblown.

“In some ways, I think there’s a little bit of an overreaction to the concern about public money,” Greenspon, a former editor of the Globe and Mail, told the Canadian Press. “The CBC has had public money for about 80 years, and that hasn’t tainted its ability to do journalism.”