Torstar chair makes case for government funding
‘More cuts will be coming, guaranteed,’ Honderich says as he details challenges facing the industry
John Honderich won’t mince words: Torstar Corp. is fighting for survival. The chair of Torstar’s board, and a member of one of the five families that control the company that owns the Toronto Star, The Hamilton Spectator, and a collection of community newspapers, sat down with The Globe and Mail last week to discuss the state of the news industry.
Mr. Honderich was part of an industry-wide effort to encourage Heritage Minister Mélanie Joly to include funding for journalism in her vision for the future of Canadian cultural policy. She rejected many of the suggested measures, saying the government would not “bail out industry models that are no longer viable.”
The struggles precipitated by declining print advertising, and by a booming digital economy that has been dominated largely by Facebook and Google – at the expense of others who would survive on digital advertising – have led to widespread job cuts. On Monday, the company tightened its belt one more notch, cutting 13 jobs in its digital and sales operations, slashing the Toronto Star’s travel and freelance budgets and suspending its summer and year-long internship programs. The Star’s internships were among the most prestigious in the country for training young journalists.
While cutting costs, Torstar is also attempting to establish its digital future. Other news outlets, including The Globe and Mail, have focused on getting readers to pay for digital subscriptions – recognizing that digital advertising is not enough to maintain the cost of running newsrooms.
The Toronto Star scrapped its online paywall in 2015, betting instead that the development of a tablet edition – later dubbed Star Touch – would attract new readers and more advertising revenue. Last June, Torstar abandoned the project after two years and a $40-million investment, and laid off roughly 30 staff. Now, Mr. Honderich said, every news organization has to find a way to make paywalls work.
How imperative are digital subscriptions to the survival of news organizations?
In terms of newspapers today, survival does not rest with print advertising, nor does it rest with digital advertising. Everyone has to look at subscription revenue, paywalls. We’ve done careful analysis of examples where paywalls are working. I’ve often said we are the authors of our own misfortune; we put all that news online for free, thinking that the number of hits on the banner ads would pay for it to survive. We were wrong.
How many publications can digital subscription revenue really support? Is it just a few, or more?
I’d like to think it’s more. But it’s an open question as to how many traditional newspapers in electronic form can hold a subscription. And added to the dynamic is something that is the greatest competitor to newspapers online and subscription: CBC.ca. It’s government subsidized. That provides a competitor for free, which makes the equation that much more complicated.
You’ve suggested that the CBC’s government funding should mean it does not compete with other news outlets for digital advertising dollars. Why?
It’s about $37-million in digital advertising that they get. If CBC were to stop, where would that advertising go? Eighty per cent would go to Facebook and Google. But there’s a more fundamental issue. The government has accused newspapers of being a failed business model. What about the CBC? The only way the CBC survives is with government grants. The only way the film industry in Canada survives is through the grants. Countries around the globe have argued that, often, culture does not pay for itself and it requires some form of public subsidy. We accept that for TV production for the CBC, for the Canadian film industry, we see it for magazines, we see it for some weekly newspapers. But we don’t see it for daily newspapers. Help me understand how that makes sense. One per cent of what the CBC gets from the government – which is $1.1-billion, so 1 per cent is $11million – that would pay for one
half of the Toronto Star newsroom.
It’s interesting, work was done for the Shattered Mirror report – if you ask Canadians, “Is quality journalism a precondition for a healthy democracy?” over 80 per cent agree with that statement. However, if you flip it, and say, “Should the government bail out failing newspapers?” 80 per cent are opposed. It matters how you frame it. And the government has been framing the issue in terms of a “failed business model.”
What is your view of the impact consolidation has had in Canadian media? How much more consolidation is to come?
As you know, we just announced a consolidation deal. [In November, Torstar and Postmedia Network Canada Corp. swapped 41 newspapers and subsequently shut down most of them.] Publishing newspapers – dailies and weeklies – is becoming more and more challenging. In an effort to lengthen the runway, give us more time, these amalgamation deals have been done.
That has meant some of the voices that have been around are no longer there. Unfortunately, we’ve just got to the point where many of these small papers, people just aren’t subscribing and buying any more. In some of these places we now have news deserts. In Ontario, there were often competing media outlets and so now you have one, but there are areas such as Moose Jaw and others, where there’s nothing. I can’t argue that it’s healthy for journalism. It isn’t. I’d like to see a world where there are as many voices in as many places as possible. That’s just not viable.
Facebook and Google draw roughly 70 per cent of digital ad spending. The Bank of Canada’s deputy governor has just said that antitrust and competition laws may have to change to cope with how tech giants are reaping all the benefits of innovation. What are your views?
Here you have giants soaking up such an incredible share of the advertising, who are able to replicate files from our newspapers and put them on there as aggregators and do so for free. Doesn’t that raise public policy concerns? It raises financial concerns. These people aren’t paying much corporate tax, or sales tax, or doing anything in this country. To me, that raises very legitimate public policy concerns.
The job losses in Canadian media are significant. What’s the runway here? How long before we see more jobs lost, more publications closing down?
We have very little time left. More cuts will be coming, guaranteed. I’m not going to speculate on various competitors, but we’re very, very close to the end. We’ve seen what owners can do in terms of maintaining quality journalism. I don’t think enough credit or recognition is given to what the Thomson and Desmarais families have done in terms of maintaining The Globe and Mail and La Presse.
Are there benefactors in Canada who would be prepared to buy and maintain a newspaper the way that Jeff Bezos has done with The Washington Post?
Quite frankly, I’d be derelict if I hadn’t been trying to find, is there a Jeff Bezos around who wanted to come in. There are certain people who can afford to do that and feel it’s important. There aren’t many of those around. And Canada’s a small place.
The Toronto Star newsroom has endured its share of job cuts as the industry copes with the loss of advertising revenue to the digital media, notably Google and Facebook.