Torstar chair makes case for gov­ern­ment fund­ing

The Globe and Mail (Ottawa/Quebec Edition) - - REPORT ON BUSINESS - SUSAN KRASHINSKY ROBERT­SON ME­DIA AND MAR­KET­ING RE­PORTER TORONTO This interview has been edited and con­densed.

‘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.

GLENN LOWSON/THE GLOBE AND MAIL

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.

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