The Canadian government is now using the last tool in the chest. They are bailing out the news sector.
Back in November, when the Online News Act was teetering on total failure, the Canadian government said that it would be issuing massive news media bailouts.
It was easy to see why the government was heading in that direction. The Canadian government would ultimately fold to Google, creating the fund model that they had asked for all along in exchange for not bankrupting the entire news sector. While die hard supporters pointed to the $100 million as a “win”, the problem was that this includes existing deals already inked by the search giant. So, a chunk of that money wasn’t even new money.
To make matters worse, when Meta dropped news links, it represented a yearly loss for the sector of $230 million. In all, the most optimistic scenario here is that the media is currently operating at a yearly loss of $130 million. It’s stating the obvious that the large media companies greed backfired quite spectacularly. A predictable outcome to say the least.
Meta, for its part, came out of this relatively unscathed with their stock value soaring six months after. This as the large media companies were left smarting quite hard with the traffic to their pages collapsing.
With the medias massive money gravy train completely dried up, they were forced to look elsewhere. Unfortunately for the mainstream media, the Online Streaming Act wasn’t looking any better. With several platforms openly contemplating leaving Canada as opposed to paying the ransom payments to stick around, lobbyist calls to have a huge chunk of the revenue derived from the Online Streaming Act may also be for not.
So, the government decided to start bailing out the news sector – specifically the largest players. After snatching up millions in tax rebates and bailout, Bell Media seemingly decided that they weren’t going to get any more benefit out of the situation by keeping up the pretense. So, they laid off 9% of the workforce. The layoffs made it clear that those jobs were as good as gone from the beginning and no amount of bailout money was going to save them. Many had understandably speculated that the bailout money likely went to managerial compensation rather than creating jobs.
The government responded to the story by being furious at Bell. The Heritage Minister argued that this wasn’t part of the deal. Prime Minister, Justin Trudeau, said that he was “pissed off”. They realized, at least for a brief period of time, that they had been fooled by the media executives. While it resulted in a bunch of political finger pointing, it was clear that bailing out the news sector wasn’t ever destined to save jobs.
Still, despite being completely humiliated by gullibly believing the large media executives despite the warnings, it seems that the government has opted to issue even more massive media bailouts. From the Globe and Mail:
The Liberal government is extending a program that funds 400 local reporting jobs across the country.
Heritage Minister Pascale St-Onge says Ottawa will spend another $58.8 million to continue the Local Journalism Initiative until 2027.
The program, which provides funding for news organizations to hire local reporters, was first established in 2019.
It’s funny because the large media companies are already on a tour of the provinces, begging them for even more bailout money on top of it all. This leads to very obvious questions of whether or not the large media companies are ever going to be sustainable.
This leads to other followup concerns surrounding whether or not the media is becoming beholden on the government to write their paychecks. Because of that, there are serious trust issues on whether the large media companies can be trusted to hold power to account. After all, are you really going to question someone when you are dependent on them to write your paychecks? Probably not.
There’s no two ways about this: the large media companies are in a panic. They have alienated a chunk of the potential audience by relying exclusively on the boomer generation for their business. They have largely devolved to simply being a glorified blog rooting for one political party over another. Their journalism quality has tanked over the years, resulting in people tuning out. So now, they have put themselves in the position where the only viable revenue streams that are left are coming from government because fewer and fewer people are interested in their product.
All of this was what experts had warned about, but those experts were dismissed as “big tech shills” throughout the debate. Now, the nightmare scenario that was long warned about is now reality. Plan A with the Online News Act is now done for. Plan B with the Online Streaming Act is on the ropes. Now, we are seeing a very heavily improvised Plan C where the government just hands free money to these companies. What a mess this situation has ended up being.
Drew Wilson on Twitter: @icecube85 and Facebook.
