Too Big, Too Postmedia: A not-so-feverish review of federal funding of Canadian journalism

A recent story in Canadaland “Trudeau’s $10 million top-up fund” is written as an exposé of federal funding of journalism and states that “government approved news organizations are not limited to receiving money from just one fund —many tap several of these initiatives at once, and some of the biggest media brands in Canada have successfully applied for all of them.”

The story cites Postmedia (120 daily and weekly newspapers), Black Press(120 Canadian publications) and magazine publisher St. Joseph’s as examples of big media brands tapping federal funding.

But the story neglects to mention that media companies owning multiple publications can only claim from one fund for any single publication. And there are four federal funds dedicated to four different types of publications.

Here’s how it works:

The Journalism Labour Tax Credit (JLTC) is available to daily newspapers. The $95M annual program made a lot of political noise when it was introduced in 2019. The Fund was administered initially by an independent third-party committee tasked to determine who was a legitimate news organization and not a political action group. Now payments are processed by the Canada Revenue Agency. The program amounts to a $14,000 annual salary subsidy, per journalist. All major dailies in Canada draw from this Fund.

A second fund the “Aid to Publishers” (ATP) program is administered by Heritage Canada. ATP pays annual grants to eligible magazines and free weekly newspapers providing “high quality news content.” Its annual budget is about $70M. About 750 publications qualified last year.

Aid to Publishers has existed since 1867. Originally it was a postal subsidy for the distribution of news to rural areas.

Due to the Pandemic-induced acceleration of the decline in advertising revenues, the Liberal government introduced an Emergency Support Fund in May 2020 that included a temporary 25% increase in the ATP program worth $15M for fiscal 2020-21. It was extended in July 2021 for the fiscal year ending March 31, 2022 at a cost of $10M. It would not be accurate to characterize the ATP top-up and the ATP as separate funds.

Importantly, publications funded by JLTC are ineligible for ATP funding, and vice versa.

Finally, the Emergency Support Fund also included a new $45M funding envelope for about 800 publications ineligible for either the JLTC or ATP, but similarly hard hit by the Pandemic’s plunge in advertising revenues.

Dubbed the “Special Measures for Journalism”(SMJ), the funding goes to Canadian publications such as trade journals, lifestyle publications or other titles that do not publish sufficient news coverage to qualify for the ATP or JLTC. The SMJ was extended for the current fiscal year at a cost of $21.5M. There is no indication from the federal government that this program is here to stay: it is part of the Pandemic “recovery fund.”

Again, the same publication cannot draw from more than one fund.

The only exception to the “one fund per publication” rule is the Local Journalism Initiative (LJI), an annual $10M program begun in 2019 to fund one-year internships or special journalism projects in “news deserts” or “news poverty” areas of coverage in Print, community radio and community TV. The program initially underwrote 342 journalism projects.

I have not cross compared LJI recipients against other journalism funds, but it’s likely there are some LJI recipient publications drawing from one of the other journalism funds. However it ought to be noted that the LJI’s purpose is to expand news coverage to neglected communities or beats, as opposed to the other funds subsidizing existing coverage.

Like any Canadian business hit by a minimum 30% revenue losses during the Pandemic, media companies have been eligible for the CEWS salary subsidy of up to $847 per weekly salary (the program is now being tapered off). Payments under CEWS offset potential journalism grants dollar for dollar.

The Canadaland story also takes aim at a handful of publishers: the Chinese language newspaper Ming Pao (too pro-China); The Walrus magazine (too close to the Liberals); and of course Postmedia (too everything).

The very big and very right-wing Postmedia is a favourite piñata for mainstream media haters (it vies with Bell for that distinction). One of the darts sent its way in the article deserves some comment because it’s misleading.

The story cites the significant dollar amounts that Postmedia (the biggest newspaper publisher in the country) has drawn from the journalism funds, how many community newspapers and jobs it has cut, and “a $52.8 million net profit in January [2021].”

I suppose the implication is that Postmedia is lining its profitable pockets with federal cash. The $52.8M figure however is exceptional as an operating income figure: it is cherry-picked from one quarterly report, Q1 2020-2021. I have posted below a spreadsheet of key debt, dividend, cost-cutting, revenue, profit and loss figures from Postmedia’s annual reports over the last four fiscal years ending August 31. You can draw your own conclusions.

Also, the $52.8M figure comes from the fiscal quarter in which Postmedia accrued a one-time $63M non-cash accounting gain on merger of its pension plan negotiated with its major union Unifor which resulted in an inflation-indexed (and more secure) pension for employees and a significant reduction in future unfunded pension liabilities for Postmedia.

This is good place to disclose: before retiring from Unifor after 33-years as a union rep, I assisted union locals in negotiating collective agreements with many large and small Canadian media companies, including staff contracts at the National Post, the Toronto Sun and other Postmedia newspapers.

Postmedia Financials Dec 12 2021DOWNLOAD