Local television news is no longer a sustainable business venture.
The big media companies who own most of the TV stations in Canada are not able to make those divisions profitable, and the remaining independents even less so.
What has gone wrong with local TV’s finances?
Advertising foots the bill for 90 cents of every dollar of local TV revenue. However local stations in Canada have seen advertising revenues decline steadily since 2010 from $2.2 billion to $ 1.8 billion and still falling.
Meanwhile Internet advertising has exploded, going from $800 million to $4.6 billion in nine years. The Internet advertising market in this country is owned 54% by Google and 14% by Facebook, and in fact together foreign Internet companies own 70% of the Canadian advertising market on the Internet.
Other than the publicly financed CBC, the “big four” Canadian broadcasters —Bell Media CTV, Rogers City, Corus Global News, and Videotron TVA— have been as a group in a loss position of approximately 8% since 2015. The smaller independently owned stations are in far worse shape, so much so that the CRTC recently threw them a lifeline with funding beginning in September 2017 which may, or may not save their local news.
Local stations have already turned to every cost-cutting measure imaginable: centralization, job-eliminating automation, outsourcing— whatever TV owners can find to minimize losses while investing in new digital broadcasting equipment. Last month Bell Media CTV, the most financially healthy of the TV companies, laid off 100 staff across the country (on top of 400 in November 2015).
As a vignette to illustrate what this means, the Bell Media CTV2 station “CKVR” in Barrie —a town of 150,000 just an hour’s drive north of Toronto— was just hit with another round of job cuts to its skeleton staff. The limb to chop off this time was local sports and its only two videographer positions. There will be no more local sports coverage in Barrie’s broadcast area, period.
Or to pick another example, last year Global News took its national investigative news show, “16 x 9” off air, to cut costs.
The situation is going to get worse. A key industry study forecasts that without government intervention, as many as 30 Canadian local stations in small and medium sized markets will close by 2020.
What may seem counterintuitive to those unfamiliar with this mess is that the Big Four broadcasters are owned by profitable media conglomerates with cable, telephone, and wireless divisions: Bell, Rogers, Quebecor, and Corus/Shaw .
As media conglomerates, these are healthy businesses. The operating margins for the cable and IPTV businesses are 20 per cent. It seems that the robust quarterly reports of the parent companies frequently precede or follow cuts to programming and jobs by the broadcasters.
The obvious solution is for the media conglomerates to meet the decline in TV advertising revenues by cross subsidizing their broadcasting properties. Public policy advocates like Unifor, Friends of Canadian Broadcasting and a host of others have been demanding the CRTC do so for years.
The CRTC has responded mostly with words, not action. The current chair Jean-Pierre Blais has offered stirring condemnations of the large media companies for not financing local television, especially local news, at the level necessary to provide viewers with the information to keep powerful companies and politicians to account.
But talk is cheap. The CRTC has never ordered the Big Four, or their parent companies, to stop cutting and to start restoring broadcasting funding.
The federal government has a window of opportunity to do something about this. The terms of several CRTC commissioners are coming to an end. The Heritage Department is engaged in a once-in-a-generation reappraisal of government aid to media, arts and culture.
Here is what Ottawa should do:
- Order an immediate re-set on the CRTC’s regulation of the Big Four local TV stations by setting new, high standards of programming requirements, feet-on-the-street journalist staffing, and expenditures . The Liberal cabinet can do this through a policy directive, much as the Harper government sent its own marching orders to the Commission in 2013.
- Without delay, direct the CRTC to tap existing industry funds for a bigger flow of financial aid to the small independent stations .
- Most importantly, the federal government must secure the long-term future of local TV by repairing the leaks to the industry funds (the biggest being the little known 5% levy on cable company revenues, now declining) that sustain local TV. That will mean looking to the new successful players in the Internet universe: Facebook, Amazon, Netflix and Google, but also the very Canadian media companies that make monopoly-like profits on every byte of streaming video: Bell, Rogers, Shaw, Telus, and Videotron.
This long-term fix is where the Heritage Department has to bite the bullet.
No doubt, any move the federal government makes will be opportunistically attacked as an Internet or Netflix “tax,” although these new levies would merely replace the inevitable decline of the cable company “tax.”
Without action though, we can be sure of a few things: television advertising revenues will continue to leak to the Internet, cable company revenues will decline, and local news will shrink until the screen goes dark. At any time in our democracy’s history this would be a calamity, but in this era of political upheaval we must defend the public’s access to the news and information that keeps the powerful in check.