Ottawa tiptoeing through a minefield with media subsidies

The federal government plans new subsidies for the press. It is tiptoeing into a minefield.

Justin Trudeau’s Liberals have never been enthusiastic about bailing out the hard-hit news industry. But over time, they have been persuaded it is a worthwhile goal.

Finance Minister Bill Morneau hinted at the government’s direction in his February budget. He fleshed out his ideas in last week’s economic statement. He promises to reveal the details early next year.

He is moving carefully because, politically, this is a tricky business.

There’s nothing new about government subsidizing the media. The practice has been going on since before Confederation — through printing contracts (in the days before there was a Queen’s Printer) and then through a postage subsidy for newspapers delivered by mail.

The Canadian Press, the national wire service, was subsidized by Ottawa during the early years of the 20th century. Later, the tax system was tweaked to give Canadian magazines an advantage over their American counterparts.

The Canadian Radio-television and Telecommunications Commission exists in part to regulate the airwaves in favour of consumers. But it also exists to protect Canadian TV networks and cable companies from potentially ruinous competition.

The CBC is government-owned and subsidized, as is TVO.

In short, when he announced plans to subsidize struggling news organizations last week, Morneau was not, in any real sense, breaking new ground.

The Liberal government would provide news organizations with refundable tax credits for some of their labour costs. It would allow publishers to set up nonprofit charitable organizations able to issue tax receipts. And it would allow digital subscribers to claim a “temporary” 15 per cent tax credit.

All in all, the three measures are expected to cost Ottawa $595 million over five years. For a government that spends close to $400 billion a year, that’s a pittance.

Nonetheless, the move is bound to be controversial.

First, most big newspapers are political by nature. Many were started as party organs. The Globe, for instance, was the voice of George Brown’s 19th-century Reform Party. Its eventual partner, The Mail, was established to promote John A. Macdonald’s wing of the Conservative Party.

The Toronto Star began as a union newspaper but was soon snapped up by Toronto business interests anxious to promote the cause of Wilfrid Laurier’s Liberals.

My guess is that as mass audiences splinter, news organizations in Canada will be under competitive pressure to become just as partisan.

There’s nothing necessarily wrong with this. But partisanship does not always go well with government subsidies. Liberal MPs might well ask why they should devote money to Postmedia newspapers like the Calgary Herald that routinely oppose them. Conservative MPs could ask the same question about the Toronto Star.

Second, the government must ensure that its support for existing news media doesn’t prevent new ventures from starting up. This is a particular problem in small communities that, more often than not, are serviced by newspaper chains.

Chains typically make their money by centralizing production and squeezing costs. But they have to be careful. If their product becomes too thin, a competitor might start up.

But unless carefully directed, these subsidies won’t necessarily encourage chains to spend more on news.

All of which is to say that putting new media subsidies into effect will require delicate footwork on the part of the government. The Conservatives are already calling the move a Liberal attempt to buy off the press. Expect more attacks.