Canadian media warns of ‘democratic deficit’ amidst local news closures, AI content ‘theft,’ and big tech’s capture of ad market

The House heritage committee heard urgent pleas from Canadian media representatives this week, who warned the mass closure of local news outlets is creating news deserts and undermining civic engagement across the country. The parliamentary committee held two hearings for its study on the “state of the journalism and media sectors” this week, with witnesses from community radio, independent news outlets, news publishers, and advocacy groups painting a stark picture of an industry in crisis. Each called for urgent government action as news outlets shrink, advertising dollars go to foreign digital platforms, and AI companies engage in alleged content theft. “Millions of Canadians now live in communities with little or no local news coverage,” said Friends of Canadian Media executive director Raj Shoan. Over the past 15 years, he stated, “newsrooms have shrunk, journalists have been laid off, entire beats have disappeared.” “This is not simply an industry transition. It's a democratic deficit,” he continued, explaining the effects this decline can have, including reduced civic participation, increased polarization, and misinformation “ the vacuum." Alongside other witnesses, Shoan said measures such as the Online News Act, Online Streaming Act, the Local Journalism Initiative (LJI), and the Canadian Journalism Labour Tax Credit are essential for media survival and need to be strengthened. Proposals included expanding the tax credit to include broadcasters, and increasing the amount of funds available through the LJI. However, there is also more the government must do to support Canadian media in recognition of news’ role as a public good, witnesses argued. “ must be considered a public good, since they are not businesses like any other, due to their essential role to democracy and in serving the public… and therefore, there needs to be public intervention to fund them,” said Marie-Eve Carignan, communications professor at the University of Sherbrooke, in French. Carignan echoed remarks made by Randy Kitt, director of media for Unifor, in which he told the committee the government should treat the industry “like a national park, something that must be nurtured, protected, and properly funded for future generations.” Surviving news deserts Local and Indigenous media are particularly vulnerable, Carignan noted, highlighting the challenges they face when it comes to getting both human and material resources, as well as professional journalism training. Mario Bartel and Janis Cleugh, co-founders of Freshet News, described their struggle launching a non-profit news cooperative in B.C. after their previous publications in Burnaby, New Westminster, and the Tri-Cities were shut down during the most recent federal election, leaving their communities in a news desert during a critical time. “We couldn't cover the all-candidates meetings, our candidates couldn't get their messaging out, and our readers were lost about who to vote for. This is dangerous to democracy,” said Cleugh. The duo argued that reporter-led collectives can fill the gap left by corporate media in some areas, but there is a lack of “infrastructure support” that exists for startups, making it difficult for initiatives such as theirs to tackle upfront costs for things like software licences, web-hosting fees, and insurance. Witnesses demand fair share of government advertising A recurring theme throughout the meetings was the "asymmetric" transfer of advertising revenue to foreign digital giants. Paul Deegan, CEO of News Media Canada highlighted that traditional newspaper advertising has plummeted from $3.5 billion to roughly $900 million over approximately the last 12 years. “This advertising revenue has clearly shifted to foreign platforms, which are gobbling up almost everything,” said Angelica Carrero, executive director of the Association des Radiodiffuseurs Communautaires du Québec (ARCQ), in French. “Canadian government money is being used to grow the financial assets of large American . This goes against the ‘buy local’ policy promoted by this same government.” Deegan criticized the government and its Agency of Record — a designated, contracted partner authorized to handle its advertising — WPP Media, for choosing the easiest route of programmatic advertising through American big tech, rather than making an effort to support domestic news brands. Witnesses including Deegan, Shoan, and Carrero recommended the federal government commit to directing at least 25 per cent of its advertising budget to domestic news organizations. According to Public Services and Procurement Canada, the federal government spent $78.15 million on advertising over the 2024 to 2025 fiscal year, but it only spent $222,000 — less than one per cent — on print advertising. Traditional broadcasting — television and radio combined — saw approximately 23 per cent of those funds. The government’s report did not specify which companies received the funds, nor how many of them were domestic or international. A 25 per cent diversion of advertising spending dedicated to domestic publishers and broadcasters, “big and small,” would have a “substantial effect,” said Shoan. “Even a relatively small diversion of internet advertising revenue to Canadian news media would be hugely beneficial.” Among his recommendations, Shoan repeated Friends’ call for Parliament to close a “tax loophole” found in Section 19 of the Income Tax Act. He explained to the committee that this provision currently allows for the full tax deductibility of advertising placed on foreign digital platforms. “Canadian advertising dollars should not receive preferential tax treatment when they're directed to foreign platforms rather than Canadian outlets,” he stated. Shoan described the proposal as a simple and effective measure that would raise money for the government while incentivizing advertisers, public and private, to support the Canadian media ecosystem. Audio streaming services making over $25 million in Canadian revenues are required to make a base contribution of 0.5 per cent towards the Community Radio Fund of Canada. According to the fund, community radio stations across the country need about $30 million in annual funding to stay on the air, but it is only expecting to receive $6 million. Carrero asked the government to supplement the remaining amount. Copyright protections urgently needed to fight AI scraping The committee was also warned that generative AI represents the next major threat to journalistic sustainability. Deegan alleged that companies such as Google, Microsoft, OpenAI, Perplexity, and the Canadian firm Cohere are engaged in the "theft of our intellectual property on an industrial scale," with AI models “ingesting, repackaging and distributing copyright protected content directly from published news articles.” “They're depriving news publishers of audience subscriptions and advertising, capturing the value journalism depends on for its survival,” he said. Some members of News Media Canada are currently suing OpenAI for alleged copyright violations. Deegan asserted that Google’s dominance in the search engine market makes it impossible for news publishers to prevent their content from being scraped for its AI-generated summaries. He said that there is no effective opt-out mechanism, and alleged that if publishers try to block Google’s AI crawler, they find themselves de-indexed and unable to attract traffic to their sites. The News Media Canada CEO proposed several solutions, including ensuring AI suppliers use material ethically with transparency, consent, and attribution, investigating competition in search and AI, and protecting copyright holders. Shoan also called on the government to better protect news creators from having their content used by AI without permission. National rating system ‘flawed,’ says APTN; shares Accessible Media’s call for dedicated public interest fund Cheryl McKenzie, executive director of the Aboriginal Peoples Television Network (APTN), emphasized that Indigenous journalists provide deeper context and unique perspectives that mainstream networks cannot match. However, APTN faces structural challenges, she said, including a flawed national rating system that often fails to measure audiences in rural areas and the northern territories, directly impacting its ability to attract advertisers. In response to these financial pressures, APTN repeated its call for the creation of a “Services of Exceptional Importance Fund.” Mike Omelus, APTN’s executive director of content and programming strategy, explained that the fund would be specifically designed to support broadcasters providing "essential public value" that is currently threatened by the dominance of global streaming platforms. Joel Fortune, legal counsel for APTN, further detailed that the fund would be supported by mandatory contributions from foreign streamers, with the money allocated independently of the government to ensure designated media entities can continue fulfilling their unique mandates without political interference. Accessible Media Inc. (AMI) also called for a funding mechanism specifically geared towards supporting public interest broadcasters, who could not survive without regulatory intervention due to their niche audiences. AMI president David Errington told the committee of the CRTC’s recent decision declining the media company’s request for a rate increase. He highlighted the company’s financials, stating that its annual revenues have dropped by over $4.4 million since 2018 as subscribers migrate to streaming services. Two years ago, this shortfall forced AMI to lay off 35 people and cancel its live morning show, leading to a transition toward an outsourced programming model. Ethnic media struggles for inclusion, warns of national security risks Representatives from the Canadian Ethnic Media Association (CEMA) also reported significant financial strain and called for sustainable support. CEMA president Kiumars Rezvanifar stated that, besides emergency COVID funding, his organization has not received "even one penny" from any level of government, citing a "systemic exclusion" from existing federal programs. Rezvanifar, together with CEMA chair Madeline Ziniak, argued financial support from the government is a matter of national security, as a lack of domestic funding makes ethnic outlets vulnerable to support from foreign governments that may demand editorial influence. Rezvanifar noted that he had been approached by the Iranian government three different times who offered to help “promote the culture…, but we’re smarter than that, we going to happen.” He turned down their support each time, but emphasized that some ethnic media outlets could still “ into that trap.” At the end of Thursday’s hearing, the committee agreed to continue its study for “at least” one more session, in order to hear from more witnesses. It has not yet scheduled a date. phalentm@thewirereport.ca

Canadian media warns of ‘democratic deficit’ amidst local news closures, AI content ‘theft,’ and big tech’s capture of ad market

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By Phalen Tynes-MacDonald
|March 13, 2026

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Canadian media warns of ‘democratic deficit’ amidst local news closures, AI content ‘theft,’ and big tech’s capture of ad market

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By Phalen Tynes-MacDonald
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