Newspaper business ‘ugly, and it will get uglier,’ Postmedia CEO says
Godfrey urges federal government to buy ads in print media, not online
Postmedia’s president and CEO is urging the federal government to become an ally to the print news industry as possible newspaper shutdowns loom, warning the business is “ugly, and it will get uglier.”
Paul Godfrey told the House of Commons Heritage Committee Thursday the doom and gloom Canadians have been hearing about the state of print media has been “understated.”
With the dramatic decline in revenue from print advertising the industry has experienced, Godfrey said, “more drastic measures will need to be taken” by Canada’s newspaper companies to stay in business.
Godfrey suggested the government could spend more ad dollars on print media, pointing to federal statistics showing government advertising in newspapers was halved, while online advertising nearly doubled, between 2010 and 2015. The bulk of that money instead went to foreign-owned behemoths like Google and Facebook, which produce no original Canadian news content.
He also suggested the government could expand its Aid to Publishers program to include daily publications and offer tax breaks to companies that advertise in Canadian publications.
Liberal MP Adam Vaughan accused Godfrey of contradicting himself.
“Your news organization is one of the fiercest critics of government advertising,” he said.
Vaughan also criticized a chainwide editorial endorsement of the Tories and a Conservative Party advertisement which appeared on the front pages of many of the chain’s newspapers during last year’s federal election campaign.
Godfrey’s responses to both issues focused on the separation between the views of columnists and the views of management. “Columnists have the right to say what they want,” he said. “The official position of the newspaper is quite often different.”
Vaughan further questioned why the government should spend taxpayers’ dollars in support of Postmedia, which is partly owned by U.S. hedge fund Golden Tree Asset Management. Godfrey noted the company is controlled by Canadians. “You can be critical of Golden Tree Asset Management, but I can tell you you’re barking up the wrong tree,” he said. Postmedia was formed in 2010 when the Canwest newspapers and the National Post were bought while under court-supervised credit protection by an investment group backed by Golden Tree for $1.1 billion. Last year it grew to become the largest newspaper chain in the country when it paid $316 million to buy Sun Media’s English-language news properties, including 175 newspapers and digital publications, notably the Sun chain of papers in Calgary, Edmonton, Toronto, Ottawa and Winnipeg, plus The London Free Press. In January, Sun and Postmedia newsrooms were merged in Edmonton, Calgary and Ottawa, with 90 journalists laid off.
“Within three years, there will be many more closures,” Godfrey said.
Though Godfrey extolled the journalistic competition between Postmedia’s newspapers, Liberal MP Darrell Samson asked questions about the mergers, which have resulted in more stories appearing in both the Ottawa Citizen and the Ottawa Sun, for example.
Gerry Nott, Postmedia’s vice president of content and the senior vice president of the National Post, estimated that “audience duplication” between the Citizen and the Sun is only about 15 per cent, and argued the Ottawa Sun has ended up with a bigger pool of journalistic resources than it had before the merger.
Still, Nott acknowledged it’s “never good” when editorial head count is reduced, and warned more cuts could be looming. “I’m not sure we have much left to trim,” he said, before the company has to cut more journalists’ jobs.
Postmedia’s most recent financial results show net operating losses of $225 million through the end of February, compared with a $58 million loss in the same quarter the year before.
Other major news companies are facing similarly bleak financial situations. Torstar, the company that owns the Toronto Star, reported a quarterly net loss of $235 million at the beginning of March.
In January Torstar company shut down the Guelph Mercury, one of the titles owned by subsidiary Metroland Media.