The following interim report constitutes only a summary compilation of the evidence the Committee has heard as of November 3, 2016. This is not an exhaustive list of all of the witnesses we heard. We have only chosen witnesses who spoke to Canadian content in a digital world.

The report does not include any findings, conclusions or recommendations. Rather, this interim report will provide input (along with evidence heard by the Committee after November 3, 2016, for the final report of the Committee). The Committee will, after all hearings are complete, begin the deliberation process of reviewing the evidence, arriving at findings and drawing conclusions. That final report is also expected to make recommendations. Readers are cautioned that, as a summary of evidence, this report conveys the evidence of those who appeared as witnesses. It does not reflect the views of the Committee at this time.

INTERIM REPORT ON MEDIA STUDY: THE IMPACT OF DIGITAL TECHNOLOGY

The Committee’s mandate

In 2009, the Committee published a report that looked at the crisis in local television precipitated by the global economic downturn. In 2011, the Committee looked more specifically at the opportunities and challenges facing emerging and digital media.

Six years later, it is abundantly clear to the Committee that local media continue to face tremendous challenges. On 16 February 2016, the Committee passed the following motion:

That the Committee undertake a study of not fewer than ten (10) meetings on how Canadians, and especially local communities, are informed about local and regional experiences through news, broadcasting, digital and print media; the unintended consequences of news media concentration and the erosion of local news reporting and the impact of new media; [and] that the Committee make recommendations and report its findings to the House.[1]

As of this writing, the Committee’s study has extended to 19 meetings. During these sessions, the Committee heard 103 witnesses and received 7 briefs.

The media as a pillar of democracy

Media play a vital role in society. They transmit information and constitute one of the pillars of a strong and healthy democracy.

Local media are particularly important because they allow citizens to keep abreast of issues in their immediate communities. In Canada, local media participate actively in community life; the news they report reflect the regions, suburbs, cities and towns they serve.

However, there is no mistaking Canadians’ continued interest in local news. In 2013, the Canadian Radio-television and Telecommunications Commission (CRTC) asked Harris/Decima to conduct a survey on the regulatory framework governing television in Canada. The firm’s study revealed that approximately 81% of Canadians ranked local news as the type of television news programming most important to them, followed by Canadian national news (78%), documentaries (72%) and international news (68%). In addition, about half of the survey respondents (53%) “value local programming.”[2]

The media sector is currently experiencing major upheavals caused largely by the expansion and use of digital technologies. A number of witnesses appearing before the Committee have even described the situation as a “media crisis.”

Consultations on Canadian content in a digital world

On April 23, 2016, the Minister of Canadian Heritage, the Honourable Mélanie Joly, launched consultations “on how to strengthen the creation, discovery and export of Canadian content in a digital world.”[3] Approximately 10,000 Canadians responded to an online questionnaire.[4] Last September, Heritage Canada released the results of this exercise. One of the highlights of this pre-consultation phase is that about 88% of participants responded that they considered having access to local content in their communities to be “somewhat” or “very” important.[5]

On September 13, 2016, the Department of Canadian Heritage launched the second phase of consultations on Canadian content in a digital world. One of the Department’s goals was to give Canadians an opportunity to “actively participate in our democracy by having access to high-quality news information and local content that reflects a diversity of voices and perspectives.”[6]

On September 22, 2016, the Department of Canadian Heritage informed the Committee that the Minister is doing a consultation.

This second consultation phase is guided by three principles:

• Focussing on citizens and creators;
• Reflecting Canadian identities and promoting sound democracy; and
• Catalyzing social and economic innovation.[7]

We believe that the evidence heard so far can contribute significantly to the current consultation on Canadian content.

PRINT MEDIA: Analogue dollars for digital dimes

Print media comprise magazines, weekly newspapers, and community and daily newspapers. They include official language newspapers in minority situation as well as ethnocultural and Indigenous publications.

In recent years, the print media have seen their advertising revenues migrate to Web giants like Google, Apple, Facebook and Amazon.[8] These companies dominate the advertising market and offer competitive prices to advertisers.

Bob Cox, Chair of the Canadian Newspaper Association, said that falling advertising revenues have led to financial pressures in the print media sector.”^[9] Although the economic environment in which the media operate has changed, “the laws and public policy measures addressing the media economy have not.”^[10] According to Mr. Cox, those rules date back to the 1980s and are no longer suited to current realities.

According to Duff Jamison, Chair of the Government Relations Committee and Former President of the Alberta Weekly Newspapers Association,[11] and Brian Myles,[12] Editor and Director at Le Devoir, revenues from digital advertising are not offsetting content‑production losses. Several companies said that, in changing their business model, they were trading analogue dollars for digital dimes.

The print media serving linguistic minorities and the ethnocultural press have also been under pressure. Francis Sonier, President of the Association de la presse francophone (APF)^[13] and Richard Tardif, Executive Director of the Quebec Community Newspapers Association,^[14] both stated that their newspapers had been hit hard by the migration of advertising revenue to digital media. Thomas S. Saras, President and Chief Executive Officer of the National Ethnic Press and Media Council of Canada, told the Committee that actual revenue from advertising on the Web was rather low.^[15] Yuri Bilinsky, Managing Editor with the New Pathway Media Group, said that it was still too soon to tell whether it would be possible to “compensate with digital advertising for the loss of the printed advertisements.”^[16] For his part, Jagdish Grewal, Editor and Publisher of the Canadian Punjabi Post, mentioned that Internet Protocol television channels in the Punjabi language were also competing for advertising dollars.^[17]

A number of witnesses raised questions about the federal government’s media placement strategy. They complained about the federal government’s increasing use of foreign-owned online platforms rather than Canadian media for advertising placements. It was argued that this strategy on the part of the federal government was helping to undermine the financial health of Canadian media.

Guy Crevier, President and Publisher at La Presse,^[18] and John Honderich, Chair of Torstar,[19] told the Committee that the print newspaper industry was in a state of deep crisis. According to Mr. Crevier, daily print newspapers in North America have lost $29 billion in revenue in the last seven years. This is coupled with a decline in reading intentions since 1998, particularly among readers in the 20-to-40 age group. To address this situation, La Presse replaced its Monday to Friday print issues with a digital version for tablets, called La Presse+, which is available to readers free of charge. The newspaper invested $40 million in this new business model. To this point, La Presse says that it has managed to hold on to a large proportion of its advertising revenue since the launch of its digital edition.

Several witnesses identified the Canadian Periodical Fund as one of the potential mechanisms for supporting the print media industry during this transition period. The Committee will further explore this option in its final report.

DIGITAL MEDIA

Digital media are transforming many areas of society, including the communications sector. Increasingly, Canadians are using them extensively for communication, entertainment and information purposes.

In February 2016, Statistics Canada published data on Canadians’ use of media to follow news and current affairs.^[20] The proportion of people who reported that they followed news and current affairs on television fell from 90% in 2003 to 78% in 2013. Print newspapers are probably the type of media most affected by the changes in Canadians’ habits. In 2003, “69% of people who followed news and current affairs at least several times a month read newspapers to get information. A decade later, this proportion was 51%.”^[21] During that same period use of the Internet to follow news and current affairs “rose significantly, from 30% in 2003 to 59% in 2013.”^[22]

The most recent data in the CRTC’s Communications Monitoring Report reveal that:

• Almost three‐quarters (73%) of Canadians aged 18 and over owned a smartphone in 2015,^[23] compared to 62% in 2013 and 24% in 2010.
• Slightly less than 53% of Canadians 18 years of age and older reported owning a tablet in 2015, compared to 10% in 2011.
• Canadians 18 years of age and older watched 5.8 hours of Internet TV on a weekly basis in 2015, compared to 1.5 hours in 2008.^[24]

In his appearance before the Committee, Paul Halucha, Associate Assistant Deputy Minister with the Department of Innovation, Science and Economic Development Canada, argued in favour of innovation and competition. In fact, Mr. Halucha felt there was “a real danger in presenting the Internet and the diversity of voices that it allows as something that is to be overcome.”^[25] He also noted that the changes affecting the newspaper industry were really not much different from the new business models cropping up in the taxi industry or the music industry.

The growing expansion of digital media has contributed to the diversity of voices in the Canadian media landscape. Their presence has democratized access to information. Nevertheless, the business model of the digital media has yet to be defined. Moreover, some witnesses criticized the quality of journalism in the digital media.

All of the witnesses agreed that the development and use of digital media would continue to grow in the years to come. In discussing her company’s prospects, CTV News President Wendy Freeman told the Committee, “our whole future is about digital first and also about doing stories that in the end will attract people.”^[26] As far as Bell Media’s representatives are concerned, the growth of new digital news platforms could help solve the problems of local television. However, the cost involved to gather and produce high-quality news remains the same “regardless of the platform on which it is made available.”^[27] Louis Audet, President and CEO of Cogeco, for his part, maintains that audience migration to digital platforms is an irreversible trend.^[28]

For her part, Colette Watson, Vice-President, Television and Broadcast Operations with Rogers, suggested modernizing “the government's funding tools and programs to reflect Canada's digital reality.”^[29] For example, the Canada Media Fund’s eligibility criteria could be revised to support local news and information programs.^[30] This suggestion was also made by Andy Leblanc, Past President of the Radio Television Digital News Association of Canada (RTDNA).^[31]

Mr. Crevier of La Presse explained to the Committee that the rapid pace of technological development was altering consumer habits, and he predicted that newsprint would disappear entirely within 10 years.^[32] He urged the Committee not to prop up a dying industry, the death of which is inevitable in his view.^[33] Mr. Crevier added that regional newspapers will not be spared when the industry makes itself over, and that they would have to adapt to the digital transformation.

James Baxter, Founding Editor of iPolitics, asked the Committee to stop intervening to “preserv[e] the old media.”[34] According to him, the news media have known for some time that they must change to adapt to the digital revolution.

Michael Geist, Canada Research Chair in Internet and E-commerce Law and Professor of Law at the University of Ottawa, said that digital news organizations “can in some instances replace some of [the] traditional organizations.”[35] He gave examples of press gallery newcomers, including The Huffington Post, The Tyee, rabble.ca, National Observer and VICE News. These digital media provide an opportunity to “reach different audiences and to cover specialized issues in greater depth than is often found in larger newspapers.”[36] He is opposed to proposals for taxes on Internet providers as a source of new revenue, which are the “equivalent of a digital tax on everything.”[37] In his opinion, this tax would make it costlier for Canadians to access the Internet and would “exacerbat[e] the digital divide”[38] between Canadians.

For Robyn Smith, Editor‑in‑Chief of the news site The Tyee, the viability of a digital-only business model remains to be seen. According to Ms. Smith, “[n]o one in Canada has yet figured out a digital-only online business model that easily supports a large number of full-time, paid professional journalists.”[39]

Measures to facilitate the transition to the digital world

Many witnesses recommended measures that would allow small industry players and the traditional media to adapt to the digital environment.

Pascale St-Onge, president of the Fédération nationale des communications (FNC),^[40] Denis Bolduc, General Secretary, SCFP-Québec, Canadian Union of Public Employees (CUPE),^[41] Robert Picard, professor with the Reuters Institute for the Study of Journalism[42] and the representatives of the Coalition pour la pérennité de la presse d’information du Québec[43] proposed the implementation of payroll and digital production tax credits that would serve to support the hiring of journalists specifically assigned to local programming or other digital technology workers such as programmers and web integrators.

It was suggested that measures which promote experimentation and innovation in the digital media be explored. The representatives of Transcontinental, Postmedia, the Canadian Newspaper Association,^[44] The Tyee,[45] the Coalition pour la pérennité de la presse d’information au Québec,[46] and professor Picard[47] proposed that the Committee look at ways of using tax credits to foster innovation in digital media. Transcontinental was more specific in its proposal, asking that Innovation, Science, and Economic Development Canada “subsidize publishers directly and/or give them refundable tax credits to support at least 50% of the capital and labour investments made in digital media.”^[48] Postmedia gave the example of the Ontario Interactive Digital Media Tax Credit which, prior to the 2015 Ontario budget, provided a deduction for news and public affairs programming.^[49] Mr. Baxter of iPolitics also believes this type of credit is promising as a model to follow.

Douglas Knight, Board Chair of Magazines Canada, told the Committee that Canadian magazines have been “leaders and innovators in the digital space.”^[50] Upwards of 90% of Magazines Canada members are publishing on digital platforms. However, Canadians continue to read magazines in paper format. According to Matthew Holmes of Magazines Canada, “the question is not whether magazines are print or digital (...), the question instead is how to support both print and digital.”^[51] Mr. Knight urged the Committee to be careful, because “all digital is not alike.”^[52] While digital platforms continue to gain in popularity, for example, “advertising doesn't work on these devices.”^[53] 

Ian Morrison, spokesperson, Friends of Canadian Broadcasting, recommended to the Committee that the exemption order^[54] implemented by the CRTC in 2009 be amended to require foreign and Canadian Internet television services to contribute financially to Canadian programming.

Some witnesses told the Committee that Canadian companies selling cultural products online are at a competitive disadvantage internationally. The representatives of Friends of Canadian Broadcasting,^[55] Rogers,^[56] the Canadian Wireless Telecommunications Association and Cogeco^[57] expressed concerns on this issue. They were all in favour of requiring foreign over-the-top providers, such as Netflix, to collect the same taxes from Canadians as their Canadian competitors and to contribute to Canadian content production funds. According to the Canadian Wireless Telecommunications Association, these foreign companies have an unfair competitive advantage over creators of Canadian content.^[58] Bernard Lord, the Association’s President and CEO, suggested that taxing foreign digital services or untaxing Canadian-owned digital services might be options to remedy the situation.^[59]

Several witnesses were harshly critical of online news aggregators such as Google News and Yahoo, which gather content from other sources without providing financial compensation to the original producers of that content. This issue was raised by representatives of the Department of Canadian Heritage,^[60] Quebec Community Groups Network (QCGN),^[61] the FNC,^[62] CUPE,^[63] Magazines Canada,^[64] RTDNA,^[65] the Canadian Association of Newspapers^[66] and Corriere Canadese.^[67]

Mr. Geist of the University of Ottawa told the Committee that this practice also has some advantages. Sites like Google and Facebook drive Internet traffic to Canadian sites.[68] In his opinion, competition is still the best way to counter this phenomenon and there are tremendous business opportunities for Canadian organizations operating in the digital world.

Finally, several witnesses suggested that the Committee draw inspiration from the Digital News Initiative innovation fund established in Europe by Google. With a budget of €150 million, this fund aims to “support high quality journalism and encourage a more sustainable news ecosystem through technology and innovation.”[69] The program is focused on three key areas: product development, innovation support, and training and research.[70] This Google initiative is in response[71] to accusations filed in 2010 by the European Commission that the company “abused its dominant position.”[72] The Commission accused the American Internet giant of using monopolistic practices in the markets for general Internet search services.[73]

What is the future of traditional media?

Several witnesses stated that traditional media (radio, television and print) will not disappear entirely; they will continue to play a role in the years to come.

Professor Dwayne Winseck of Carleton University pointed out that digital media “do not replace traditional media, but ... interact with them in complex ways.”^[74]

The representatives of Alliance de radios communautaires du Canada (ARCC)^[75] and the National Campus and Community Radio Association^[76] felt that over-the-air community radio stations still had solid support from the community, despite the preponderance of new media platforms.

The representatives of CUPE,^[77] the Fédération des communautés francophones et acadienne du Canada (FCFA du Canada),^[78] ARCC,^[79] QCGN^[80] and RTDNA^[81] argued that investments in digital media should not be made at the expense of traditional media.

Ethnocultural press representatives acknowledged that their readers are increasingly turning to digital media, especially the younger generations. However, “a strong demand for print media”^[82] still exists among older immigrants and new immigrants.

Mr. Bilinsky of the New Pathway Media Group confirmed that “the impact of digital media is quite substantial.”^[83] He noted that “digital media, by its nature, is very democratic,”^[84] in the sense that such media can be accessed by anyone in the entire Ukrainian community. He noted that it was still too soon “to tell whether we will be able to compensate with digital advertising for the loss of... printed advertisements while still preserving the printed version of our newspaper.”^[85]

Access to broadband Internet services

In its 2016 Communications Monitoring Report, the CRTC defines broadband service as any service including a 1.5 megabits per second (Mbps) or greater download speed.^[86] This speed allows for standard definition video streaming, real-time video gameplay and music downloads. Speeds of 5 Mbps and higher allow for high-definition video streaming.^[87] In 2015, broadband download speed of at least 5 Mbps was available to about 96% of Canadian households,^[88] although the cost varied from one region of the country to the next.

Several witnesses told the Committee that there are still parts of Canada where access to broadband Internet is problematic or non-existent.

Mr. Winseck of Carleton University pointed out to the Committee that Internet access is far from being universal in Canada and that this situation is related to income inequality.^[89]

Jean-François Bernier, Director General, Cultural Industries, with the Department of Heritage Canada, told the Committee that access to broadband capacity is needed to view various digital products. Like other witnesses, he commented that in certain areas, access to this type of connection is “not obvious.”[90]

Mr. Geist of the University of Ottawa, for his part, said that access to affordable broadband service for all Canadians is essential to reducing the “digital divide”[91] that currently exists in Canada.

Representatives of the FCFA,^[92] Aboriginal People Television Network (APTN),^[93] the QCGN,^[94] the FNC^[95] and the Public Interest Advocacy Centre^[96] told the Committee that access to broadband services remained problematic in some regions. According to Mr. Sonier of the APF, access “can be difficult in places … such as northern Manitoba, the Northwest Territories, or even some areas of Newfoundland and Labrador.”^[97] Mr. La Rose of APTN explained that his network was having difficulty delivering its digital signal in some parts of the North, such as Nunavut.^[98]

Several companies echoed the community network in stressing the importance of ensuring that all Canadians have access to broadband Internet services. Ann Mainville-Neeson, Vice-President of Broadcasting Policy and Regulatory Affairs at TELUS, told the Committee that private investment is the “best way to achieve the highest connectivity for our country.”^[99] While TELUS welcomed the $500‑million investment in broadband services announced by the government in its last budget, Ms. Mainville-Neeson pointed out that, in the company’s estimation, it is still not enough.^[100]

Mr. Audet of Cogeco also believes that these new investments are good news. Nonetheless, he urged the government to think about remote communities that do not have access to broadband Internet, as well as low‑income Canadians.^[101]

CBC/Radio-Canada and Canadian content

The legislative mandate of CBC/Radio-Canada mentions that the Corporation’s programming must reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions.^[102] Several witnesses made certain to remind the Committee that the CBC plays a central role in showcasing and supporting Canadian content in all of its platforms.

Like commercial television stations, the national public broadcaster has suffered advertising revenue losses on its traditional services. The Corporation is trying to offset these losses with higher digital advertising revenue.[103] Most witnesses who commented on this practice were strongly in opposition.

Mr. Cox of the Canadian Newspaper Association explained that the broadcaster is sometimes also competing with print media on digital platforms.^[104] Mr. Honderich from Torstar Corporation said that CBC/Radio-Canada was Torstar’s biggest competitor, “spending incredibly on its website”[105] and generating advertising revenue via its digital platforms.

Mr. Baxter of iPolitics expressed a similar position as Mr. Honderich. He asked the government to stop “funding the CBC's massive expansion into digital-only news in markets”[106]. According to Mr. Baxter, the funding granted to the Corporation is “the biggest single obstacle to there being a vibrant and innovative marketplace of ideas in the media space.”[107] Mr. Baxter also suggested “that any CBC content, because it's publicly funded – video, audio, and digital – be available in real time in the public domain for any other approved news sites to use.”[108] Meanwhile, Mr. Geist from the University of Ottawa, suggested that the Corporation be required “to adopt an ad-free approach to its online news presence.”[109] This approach would ensure that the Corporation does not compete directly with the private sector for advertising dollars.

CBC/Radio-Canada representatives appeared before the Committee on May 19. CBC/Radio-Canada shows a strong commitment to the new digital platforms to distribute content and interact with users, as a core component of its services to Canadians.

They particularly emphasized the fact that radio, television and digital services were now integrated into a single service. According to Michel Cormier, Director General of Information with the Corporation’s French-Language Services, the Corporation “can no longer simply offer programming at set times.”^[110]

CBC/Radio-Canada’s Strategy 2020: A Space for Us All commits the Corporation to becoming more local, but at less cost.^[111] The Corporation intends to continue offering news and information services on traditional media, but it will put more emphasis on digital media in the years to come. CBC/Radio-Canada’s Michel Cormier told the Committee that bringing the national public broadcaster back to where it was even five years ago was entirely out of the question.^[112]

SUMMATION

This interim report provides a sample of the concerns raised by industry stakeholders and of the measures proposed to improve the situation. The Committee will continue its study and thanks all those who participated in its work. In the coming months, the Committee plans to make its own recommendations in its final report.