CBC, Facebook digital ad sales hurting newspapers, committee hears

OTTAWA — The Canadian government should review its mandate for CBC/Radio-Canada in light of the national broadcaster and foreign digital competitors taking away ad dollars from local newspapers, individuals representing the latter told the House of Commons standing committee on Canadian Heritage Thursday. The committee heard from four different local newspapers and groups, including the Aboriginal Multi-Media Society of Alberta, the Neepawa Banner, Northern News Services Ltd. and Halifax, N.S.’s The Chronicle Herald. All expressed concern that their advertising revenue was being sucked away, while the government funnelled ad dollars toward the CBC and foreign digital entities. There is “change in media consumption coupled with disruptive competitors,” Mark Lever, president and CEO of The Chronicle Herald, said via videoconference. “Here I’ll make the obvious new media entrants, like and . But I want to also add Canadian disruptors like the government-funded CBC. They’ve all substantially fragmented audience and stripped advertising revenue.” He added: “Because of the national network capability of the CBC, we’ve seen attrition in our digital advertising spend, so they’re a competitor not just for eyeballs but also for ad dollars that are diminishing.” While the CBC is a “tremendous Canadian institution,” he said “the government’s decide whether it can compete for our advertising dollars in the digital space and aggregate our content, or if it’s going to be a completely public funded entity.” On a number of occasions, the $675 million earmarked by the federal government for the CBC over five years was raised. That was juxtaposed with the $75 million that the government is giving to the Canada Periodical Fund, which supports small and mid-sized print magazines and digital publishers. Ken Waddell, publisher of the Neepawa Banner, said that $75 million is spread across 1,300 publications across the country. “That is absolutely ludicrous,” Waddell told the committee. “If you wonder why government isn’t able to help publications by buying ads, not grants…that’s where your money is going.” He added that the CBC is “into our territory” in the web market because it’s “allowed to skim off advertising dollars.” At a meeting of the same committee Tuesday, Brian Lilley, co-founder of The Rebel, said that the government should make the public broadcaster “stick to its knitting.” He said he didn’t understand why the CBC keeps coming to Parliament saying it doesn’t have any money, while it is competing in streaming music or setting up in areas such as Kelowna, B.C., or London, Ont., that already have “strong local shops.” Globe and Mail publisher and CEO Phillip Crawley also brought up the issue in an appearance before the committee Tuesday, stating that “the big global players soak up a lot of that digital revenue,” while Google representatives said the company is ““grabbing nothing from no one.” Waddell said in an interview after the hearing that “the government needs to quit, in a general sense, creating winners and losers … They’re making the CBC a winner and they are making the community media a loser, and that’s not fair.” He added that if the government were to “take the and spread it across all media, O.K., I’m fine with that,” and that the government could use a formula allocating a specific dollar amount for each reader or TV or radio station, for example. “If business and governments cut off the advertising leg, the stool will fall over and Canada’s communities will fall over with them,” he said. The question also came up during the International Institute of Communications’ (IIC) conference Thursday, where Heritage Minister Mélanie Joly was asked about concerns from the newspaper industry during a question-and-answer session. Joly reiterated that “we profoundly believe in the importance of a public broadcaster. We’ve been saying it since the election.” “The question is more, what is the future of journalism, and how can there be a sustainable model? And this is why you hear, ultimately, that debate over the competition regarding ad dollars,” she said. She added that the mandate of the CBC is one of the issues the government is looking at as part of its ongoing consultation on the future of Canadian content in a digital age. Lever said there has been a 54 per cent reduction in combined provincial and federal government ad spending on the Chronicle Herald over the past three years, from $600,000 in 2013 to $280,000 this year. “We’ve experienced dramatic changes in spends from our government partners at a rate greater than industry,” Lever said. “Our provincial and federal governments have reduced their ad spends in our products, presumably with an increased emphasis on advertising with foreign corporations such as Google and Facebook.” Lever cited digital analytics website comScore Inc., which he said found 88 per cent of all Canadian digital advertising revenues are going to large, foreign-owned social and media sites. “The social media platforms aren’t focused on the kind of content that is important to a free and democratic society,” Lever said. “They’re concerned about volume of content and filling data feeds with entertainment, ‘clickbait’ and low-quality commentary.” Kevin Chan, Facebook Canada’s head of public policy, who appeared at the hearing, said the company is working on “downranking” what it considers “clickbait” in its newsfeed. Waddell added that advertisers should be cognizant of the consequences of where they place their ads, warning that selling them to websites like Facebook and YouTube would not go to support local communities. Casey Lessard, editor of Nunavut News/North, said the government of Nunavut is “certainly spending money on Facebook advertising instead of spending that money with us,” adding the “real competition” is Facebook and the CBC. He suggested that the various levels of government should advertise locally. Lever urged the government to spend its advertising dollars on Canadian content and said that the Canadian Heritage Fund and the Periodical Fund should be “broadened to incorporate daily subscription-based newspapers.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and Charelle Evelyn at cevelyn@thewirereport.ca and reporting and editing by Anja Karadeglija at akarad@thewirereport.ca

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