Quebec news funding will help with Google, Facebook dominance: Le Devoir

As the Canada Revenue Agency considers how to administer $595-million worth of tax credits it pledged to news media, the Quebec government has unveiled a newspaper assistance strategy that some say will help digital media navigate an environment dominated by foreign technology giants. Earlier this month, Quebec announced a print media plan that would allow eligible newsrooms to claim a refundable tax credit of 35 per cent of wages up to $75,000 tied to the production of original written news, retroactive to Jan. 1, 2019. The program will cost the provincial government about $50 million a year through to 2024 and includes an extension of the previous government’s tax credit for the written press as they migrate to digital. It comes after Quebec held hearings in the National Assembly at the end of August about how to support journalism in the province. Taken together with the federal government’s own $595-million worth of tax credits for newspapers, which allow for a refundable credit of 25 per cent, eligible Quebec papers could be allowed to deduct 60 per cent of newsroom costs, the most amount of any province. The support measures will help with the digital transition, an executive at prominent French-language newspaper Le Devoir said. “It will alleviate the pain because media has suffered a decline of their advertising sales,” Le Devoir director Brian Myles said in a phone interview, adding it will allow the company to take on more risk and hire more reporters. “Many people thought that we’d be able to find those digital advertising dollars easily, but it’s not the case. Google, Facebook has a share of the market that goes to 60, maybe 70 per cent. The actual news publishers are left with very few dollars.” In 2017, a report out of Carleton University estimated that Alphabet Inc. and Facebook Inc. took home 72 per cent of Canada’s $5.5 billion internet advertising market in 2016 -- an increase from 66 per cent the previous year. “The next step would be to bring back some sense of equity with the likes of Google and Facebook,” Myles said, saying that that load will be borne by the federal government. The current federal election campaign has featured overtures promising the taxing of foreign digital giants such as Facebook and Google. Conservative leader Andrew Scheer said last week during a federal leader’s debate that a new regime for digital media is required. His party's platform, released Friday, promised a three-per cent tax “on revenues of businesses that provide a social media platform, search engine, or an online marketplace to Canadians.” The Liberals, meanwhile, have also promised a three-per-cent tax on on revenue generated through the sale of online advertising and user data by the world's largest digital companies. While the tax talk has been concentrated on levelling the playing field for Canadian companies and putting more money in the government's coffers, the increasing move by Canadian media for digital ad revenue -- as the space is dominated by the foreign juggernauts -- has led to questions about the viability of the business model. Myles said his paper has been able to grow its digital subscriptions over the last five years for insulation against the uncertainty of digital ads. Le Devoir had been lobbying the Quebec government for assistance since at least August, asking for support measures for newspapers, including payroll tax credits, subsidies or tax credits for the development of digital platforms, exemption from a recycling tax and exclusion from Quebec tax on the sale of print and digital editions of newspapers. The new Quebec plan includes a full exemption from recycling tax. “The program is well-crafted, it fulfills our needs and I’m not expecting any more and anything else from the Quebec government,” Myles said on Tuesday. The plan also includes a pledge from the government to review its advertising spending to “better support regional media.” For many months, two local Quebec radio groups -- representing around 60 stations in the province -- have asked the government to shift more of its advertising budget to their members, instead of just to BCE Inc., Cogeco Inc. and other larger players. “We are listening to the various regional speakers who have been speaking for some weeks now in the context of the parliamentary commission on the future of the media,” Nathalie Roy, minister of culture and communications for the government said in an early October press release. “We will unveil a new policy targeting government advertising in the regions.” No further details are provided, but Roy said in the release that more information will be available when the committee’s report is released in “a few weeks.” Before the hearings were convened, Quebec’s premier Francois Legault tweeted support for newspapers following the bankruptcy declaration of an influential French-language paper chain, and pledged $5 million from the government to prop up the Groupe Capitales Médias. All of this occurs as advocacy group Friends of Canadian Broadcasters and the Public Policy Forum have been lobbying to stop the ability of Canadian news organizations to claim tax exemptions on advertising purchases on foreign digital platforms. Recently, news media authorities, at the behest of Canadian Heritage, published a report with recommendations on how to divide the federal government-pledged tax credits. Those include a tax credit for journalism organizations, a tax credit for subscriptions to Canadian digital news, and charitable tax incentives for not-for-profit journalism. That announcement, which was later fleshed out in this year’s budget, first came in the federal Liberals’ fall economic statement in November, approximately one month before Le Devoir added an additional federal lobby topic about “funding support obtained for canadian journalism.” It had already registered to discuss “funding assistance for the written press.” Like the federal program, the Quebec plan draws some lines as to eligibility. Both the federal and provincial plans focus on the written press -- with broadcasters left on the sidelines -- that create original news reporting on general public interest topics. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Quebec news funding will help with Google, Facebook dominance: Le Devoir

News | October 15, 2019

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Quebec news funding will help with Google, Facebook dominance: Le Devoir

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