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Newsonomics: McClatchy’s bid has been rejected. So what’s next for Tribune?
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Nov. 26, 2018, 12:18 p.m.
LINK: www.thestar.com  ➚   |   Posted by: Christine Schmidt   |   November 26, 2018

While Americans spent last week pardoning (and eating) turkeys, our neighbors to the north were focused on bringing home the bacon for Canadian journalism.

Canada’s federal government introduced a CAN$595 million-over-5-years tax package to bolster the country’s journalism market, including:

  • A temporary, non-refundable tax credit that will allow subscribers to claim 15 per cent of the cost of subscriptions of eligible digital news media. This is meant to help support digital news organizations in achieving a “more financially sustainable business model.”
  • A new category of “qualified donee” for non-profit journalism organizations that will, in essence, give them charitable status to issue receipts for donations from both individuals and corporations. And it will open the door for foundations to provide financial support. This measure builds on a pledge in the 2018 budget to explore new models to enable private giving and philanthropic support for journalism.
  • A refundable tax credit for qualifying news organizations that “produce a wide variety of news and information of interest to Canadians.” The tax credit will apply to the labour costs associated with producing original content and will be open to both non-profit and for-profit news organizations. The measure will allow outlets to claim a portion of their labour costs. An independent panel drawn from the news industry will be established to define eligibility of the measure, which will take effect Jan. 1, 2019.

That’s the breakdown from The Toronto Star, which is one example of a messy journalism model. Its website split up that brief explanation with two ads and two related links sections alone. The same day Canada announced these plans, Torstar, the Star’s parent company, announced its own “restructuring measures” and laid off 13 employees on top of layoffs earlier this month and in October. It’s not alone: Postmedia, Canada’s largest chain, has cut more than 3,000 jobs in six years.

Canada’s media industry woes are not a surprise — a third of Canadian journalism jobs have disappeared since 2010, the advertising market has bottomed out globally, and the Great White North ranks low for readers paying for online news compared to other countries. It’s seen a few digital-first news organizations launch, like Discourse Media and The Logic, aiming for reader revenue to sustain themselves. And the CBC, while underresourced compared to its Western European peers, still receives much more per capita public funding than America’s PBS and NPR.

Could $600 million in federal tax breaks be a true booster? The answer is, also unsurprisingly but resoundingly, “murky”. “The measures could simply create subsidy-dependent news outlets whose existence suppresses the development of self-sustaining business models,” wrote Erin Millar of Discourse Media. “When the funding disappears at the end of its five-year run or with a change in government, we would be left with an unsustainable news sector — missing the opportunity for meaningful systems change that could deliver real impact on communities.”

J-Source rounded up the Canadian media industry reaction:

CWA Canada, a media union that represents industry workers from outlets such as CBC, Vice and Thomson Reuters, welcomed the announcement, “but cautions that the devil will be in the details…. But we will need to see the details before we can fully endorse the package,” added the CWA. “We don’t want to see the money being used by companies like Postmedia to pay off their hedge fund masters or to further line the pockets of top executives, and we have told the government that.”

Postmedia CEO Paul Godfrey did indeed celebrate the plan out of Ottawa.

As of 2019, independent media organizations will have access to federal support for the production of non-profit news under creative commons licences.

“This will allow local news organizations to access the content produced for free, helping to bolster local news coverage as organizations struggle with reduced capacity,” explains the Department of Finance’s report, “Investing in Middle Class Jobs.”

It is unclear if the same industry panel responsible for deciding eligibility for tax breaks will also advise on other measures, including supports for underserved communities.

Down south here in the U.S., nonprofit status for news organizations has been a boon — the nonprofit news sector now reaches almost $350 million in total annual revenue, though it’s tough to tie that connection to donor tax break/incentives. The model has been held back in Canada because of its restrictive tax laws, which this new approach should (could? might?) help ease.

American news outlets have also made entreaties to Canadian consumers, with Canadian subscribers comprising 27 percent (around 94,000 subs) of The New York Times’ international subscriber base. It’s unclear if non-Canadian news organizations get a share of the government’s plan.

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