Question Period Note: COVID-19 Support for Journalism

Canadian news publishers continue to struggle. The current COVID-19 pandemic has now dramatically amplified revenue shortfalls which jeopardizes an already fragile industry.

• The news industry has faced significant economic pressures for years and these challenges are being exacerbated by the COVID-19 pandemic.
• Our Government has taken action rapidly to support businesses during this time, including through the $500 million Emergency Support Fund for Cultural, Heritage and Sport Organizations.
• As part of Phase 1 of the Emergency Support Fund, magazines and community newspapers that receive support through the Canada Periodical Fund (CPF) received a 25% funding top-up.
• Phase 2 goes further by implementing the Special Measures for Journalism program. This program is a one time funding for digital, small circulation, and free magazine and community newspaper publishers.

Emergency support for journalism due to COVID-19
• As part of the Emergency Support Fund for Cultural, Heritage and Sport Organizations, the Minister of Canadian Heritage announced temporary relief measures to support Canadian periodicals. These temporary measures are estimated to provide an additional $63.7M to Canadian periodicals and are being rolled out in two phases.
o Phase 1 (announced May 8th): one-time 25% top-up to existing magazine and community newspaper clients of the Aid to Publishers component of the Canada Periodical Fund.
o Phase 2 – Special Measures for Journalism ( announced July 7th, 2020): One-time funding for digital, small circulation and free magazine and community newspaper clients that do not currently receive funding from the program.
Local Journalism Initiative
• Following Budget 2018, the Government announced funding of $50 million over five years to support the production of original civic journalistic content covering underserved communities. Funds were approved for the period from 2019-2020 to 2023-2024, with an allocation of $10 million per year.
Tax measures to support journalism
• Budget 2019 reaffirmed and clarified three measures to support Canadian journalism that were previously announced in the 2018 Fall Economic Statement:
o Adding registered journalism organizations as a new category of qualified donors, enabling them to receive donations and issue official donation receipts;
o Introducing a new refundable tax credit of 25 percent on salaries or wages paid to eligible newsroom employees in qualifying Canadian journalism organizations (QCJO). Labor costs will be subject to a cap of $55,000 per employee, for a total tax credit of $13,750 per employee, per year (broadcasters and Canada Periodical Fund recipients are ineligible); this measure applies to expenditures incurred as of January 1, 2019;
o Introducing a new temporary, non-refundable tax credit of 15 percent for subscriptions to Canadian digital news media. Individuals will be able to claim up to $500 in costs paid toward eligible digital subscriptions, for a total tax credit of $75 annually. This measure will apply as of January 1, 2020.
• These measures are estimated to cost $595 million over five years.
• To preserve the independence of the press, an independent panel was established to recommend eligibility criteria for these measures. The panel’s report was released publicly on July 16, 2019.
• On April 17, the Department of Finance Canada announced draft legislation that would amend the journalism tax measures announced in Budget 2019 to allow news organizations that receive support throughthe Aid to Publishers component of the Canada Periodical Fund to qualify for the Canadian journalism labour tax credit and removal of the requirement that journalism organizations be “primarily” engaged in the production of news content and not significantly engaged in the production of content to promote goods and services. Newsroom employees eligible for the labour tax credit would need to spend at least 75 per cent of their time engaged in the production of original written news content.
Recent industry developments
• Groupe Capitales Médias transforms into CN2i (6 workers co-ops formed of each coop’s management and employee); continued layoffs at La Presse with 15 positions abolished in its newsroom; Torstar’s StarMetro free dailies (formerly Metro) closed, resulting in 73 layoffs; Torstar acquired by NordStar Capital for $60 million.

COVID-19 impacts
• The COVID-19 pandemic has dramatically amplified revenue shortfalls for the industry. In opening weeks of the pandemic, news publishers reported a drastic and unanticipated drop in advertising revenues. Preliminary estimates from industry associations and information obtained from certain publishers reported a decrease of approximately 50 percent in advertising dollars in the first 3 months of the crisis alone.
• According to the COVID-19 Media Impact Map for Canada, more than 100 media outlets in Canada have made cuts in 11 provinces and territories in a six-week period, with nearly 50 community newspapers ceasing operations resulting in more than 2,000 job cuts.
• Industry stakeholders (including news publishers, union representatives and editors) are calling on the federal government to follow countries like France and Australia who plan to oblige Google and Facebook to pay for news content and sharing ad revenues with publishers.

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