Canadian Government to Cap CBC’s Online News Act Haul to $7 Million

The Canadian government has decided that maybe giving the heavily subsidized CBC so much money might not be a good idea after all.

It was gearing up to be quite a case of history repeating itself. When Australia got a deal with the platforms in exchange for not designating them under the Australian Bargaining Code, the largest players – namely the Rupert Murdoch owned News Corp – got a lions share of the money that came out of those negotiated deals. After getting quite the financial haul, the Australian news giant slashed 1 in 20 staff members, proving that the whole thing ultimately had nothing to do with either creating or preserving jobs. While I was able to tip off Senator Paula Simons about this development, and she was able to question multiple witnesses about this, the question about the effects of similar laws here was responded to with a very forceful dodging of the questions and the issue was swept under the rug after.

Late last month, the Canadian government caved to Google, handing them everything they asked for and called it a “deal”. Part of the “deal” was that Google gets to pay up to $100 million per year, adjusted to inflation. We say “up to” because the originally inked deals Google had with publishers would get absorbed into this funding, meaning that it isn’t all new funding.

The thing is, with how full time employees are calculated, the CBC was set to get $33 million of the $100 million. That would mean that there is only around $66 million left for the rest of the entire news sector. The CBC then responded to the resolution as one of the only news organizations that were seemingly happy about the outcome, suggesting that this was a great day for journalism. This as other Online News Act backing “news” organizations condemned the deal, saying that they cannot support the outcome.

So, in response to the development, the CBC slashed 10% of its workforce. It essentially repeated the history of Australia and proved, once again, that a link tax is definitely not the saviour of existing jobs, nor the creator of jobs that its supporters suggest it is. It is also why one of the calls I made was to tie the money to the creation of new jobs or any new spending. Unsurprisingly, like all other good ideas, the concept was flatly ignored because this was about giving a blank check to these corporations in the first place, not actually bettering journalism in this country.

Of course, part of what makes the CBC so especially controversial in it getting such a huge portion of the loot is the fact that it is heavily subsidized by the government. This is to the tune of $1.24 billion. For a lot of other large corporate players – many of which are basically owned by hedge funds these days – this is ultimately an unfair market advantage. If one of your competitors is getting over $1 billion annually in free taxpayer money, then how are you supposed to compete against that?

What’s more, throughout the debate, the argument for the Online News Act was that this was supposed to be about getting smaller players on board with so-called “deals” which is everything the CBC is not. Granted, the smaller players were only ever going to get left with crumbs at best (and more likely nothing at all) since this is actually about the larger players getting a huge chunk of the funding pie, so this was just a fake cover story to sell the Online News Act.

Now, we are learning that the optics of handing such a huge chunk of funding over to the already heavily government subsidized news entity might have been a bit much. A report from the Globe and Mail (probably paywalled) says that the government is capping the money haul going to the CBC to $7 million:

Ottawa is capping CBC’s share of the funds the news industry will gain under the Online News Act at $7-million, with other broadcasters getting no more than $30-million of the $100-million Google will inject into Canada’s news industry each year.

Almost two-thirds of the Google funds resulting from the Online News Act will now go to written media, including local papers serving francophone and Indigenous communities, government regulations published Friday said.

The report goes on to say that the very media organizations that the government alleges that this money is going to will be left to fend for themselves:

Ms. St.-Onge said all independent media, including the ethnic press, would be able to join the collective to seek Google funds.

But Maria Saras-Voutsinas, executive director of the National Ethnic Press and Media Council of Canada, said the regulations “leave the ethnic media to fend for themselves.”

“Without additional support, this one-size-fits-all approach will result in closures and mass consolidation of the ethnic press,” she said.

The final regulations say that “reasonable” administrative costs can be taken out of the Google money to run the news industry collective. This would reduce the overall amount available to news businesses.

Indeed, if broadcasters are destined to get $30 million, that leaves $70 million for everyone else. With the formula saying that the amount of money going to different entities will be decided based on full time jobs, then the largest players will get a lions share of the rest of the money, leaving smaller players with, at best, scraps. So, it’s not at all surprising that Saras-Voutsinas reacted the way she did to the news.

Unless we see more stringent caps on what other players are going to get out of this, then the CBC cap just moves the money from one large player to a handful of other large players. Given that the total value is merely 10% of what would have been needed to stabilize the news sector in Canada, the chances of it really making much of a difference in the news sector is going to be virtually non existent.

Drew Wilson on Twitter: @icecube85 and Facebook.

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