Some questions and concerns about the Canadian media bailout

Yesterday’s federal budget included some long-expected provisions for helping the struggling newspaper business, on the grounds that  “A strong and independent news media is crucial to a well-functioning democracy.” The three main provisions are a refundable tax credit for journalistic labour (i.e. reporters), a tax rebate for up to 15 percent of a digital subscription, and allowing non-profit news orgs to become charities and issue tax receipts for donations.

I should say I'm generally opposed, in principle, to giving public money to the media. But if they're going to do it, I hope they do as little damage as possible. And so instead of just complaining about the whole enterprise, I’d like to try to be constructive, or at least offer some constructive complaints.

 In particular, I’d like to take issue with this strange claim, from the Toronto Star’s report on the budget:

Contrary to criticism that government assistance would compromise the independence of news outlets, the criteria makes almost no demands on content — save that the organization primarily focus on original news content such as current events or general interest.

So first, to qualify for any of these three measures, an organisation has to be a Qualified Canadian Journalism Organization, or QCJO (they should have put a bit more time into the acronym). Anyway, the budget lays out the criteria for what sort of organisations will count, based on corporate structure and ownership rules (must be Canadian); what sort of content it covers (print news for a consumer audience, not industry magazines and newsletters); and its size (two or more employees at minimum).

But the budget also sets out a plan for an independent panel that will be tasked with making a number of key decisions. Which raises the question: Are the above qualifying criteria to be a QCJO exhaustive -- that is, are they the sufficient conditions to qualify? Or are they just necessary conditions, with further conditions to be decided by the panel? That is, could the panel decide that even if an organisation met the formal criteria outlined in the budget, for some reason or another they wouldn't qualify it for QCJO status? This is an important point that I have not seen a proper answer to.

 Second: The labour tax credit provides for a 25% rebate on an employee’s salary, up to $55k per employee, so the rebate is capped at $13750 per employee. The obvious question is: Who counts as an eligible newsroom employee?  It seems they want to limit this to "news" reporters, and the budget goes so far as to list the sorts of activities that would count, and even hazards a guess that it should be someone who spends at least 75 per cent of their time on "news content".

No one who had spent more than a day working in a newsroom could endorse that sort of time slicing definition of a news reporter, but leave that aside (since the budget itself does, handing the ultimate decision off to the panel.) And the panel has a heck of a job here. What sort of news would count? The Ottawa Citizen still employs a rock music reporter and a bunch of sports guys and a science journalist. Ok, rock music maybe doesn't qualify. But does sports? The Citizen's sports reporters have been covering the Senators, which is owned by Eugene Melnyk, who is part of the gong-show redevelopment of LeBreton flats, which is a heavily political issue. And Tom Spears writes science journalism, including covering the Canada Space Agency and federal institutions like the museum of science and technology. Should he count?

Again I know the answer is "the panel will decide", but you can easily see: a) how the panel membership’s built-in biases will be a problem, and b) how newsroom managers will be forced to play games with reporters' assignments and job descriptions to get the maximum number of qualifiers.  At the very least, this will have the effect of pushing newsrooms into certain kinds of coverage and away from others, not because the audience wants it, but because the tax man demands it. And the Star thinks this budget makes no demands on content? Please.

 Third, the CAJ in a statement says “the $55,000 cap will incentivize news outlets not to pay employees more than that. For unionized outlets, some of which have a starting salary in excess of $55,000, this structure could encourage the breaking of unions.” I don’t know if that’s the case but it raises important questions. I would love to see an economist weigh in to help explain what this sort of tax credit does to wages, and how it might affect union bargaining.

Fourth: The government has allocated $360 million over 5 years for the labour tax rebate, which works out to $72 million a year. At a full rebate of $13750 per employee that would subsidize benefits just under 5500 journalists, or somewhere just under half of the total number of employed in the country according to last year's census. So ok they all aren't news reporters, and they don't all make $55k, but what if the rebate hits the $72 million cap, which my napkin scribblings suggest it could? Presumably then the panel will have to decide how the limited money gets parsed out, and to whom, and according to what principles. I'd love to be in the room when the formula for that disbursement gets negotiated.

Fifth: The focus for this is on print content. Why, apart from the fact that the Toronto Star and Postmedia have been the ones whining the loudest? Shouldn’t saving democracy be neutral with respect to media delivery? If a newsroom thinks it can succeed by pivoting to video or podcasts, don't we want them to do this? This plan will dissuade them from doing so, and hence will hinder innovation and experimentation, by giving the big news organisations every incentive in the world to stick to what they’ve done for 100 years or more.

So what do we make of this? Right now, the only thing I think we can say for certain is that the independent panel is going to have enormous influence over Canadian media -- how it is structured, who it employs, and what it covers. And so it will matter enormously who is on the panel. But it will also matter enormously how much discretion they have. And it will matter enormously what sort of decision procedure the panel will use in exercising that discretion? Is it a majority vote? Unanimous?  The horse trading and bargaining and special pleading that will go on will not be pretty, to put it mildly. How transparent will the panel’s decisions be? Who will decide that? Do we trust the media to report fairly on all this? 

If anyone could provide me with model for where something like this works anywhere on Earth I’d like to see it. In the meantime, I’ll just leave you with this tweet, from a journalist whose work I respect very much:

Who is Ezra you ask, and why should we be worried? If you don't know the answer to that, then that's part of the problem.