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The Blueprint – Centralization of Media Ownership in Canada – Part 1

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Freedom of the Press. Sounds like something we take for granted today. but just how free is our press?

To make informed decisions, citizens need a wide range of news and information. They also need access to a broad and diverse array of opinions and analyses about matters of public interest. Journalists are important providers of such information, as are the information media that transmit such material. This is why the freedom of the press is widely recognized as a central pillar of any democracy. In Canada, Section 2 of the Charter of Rights and Freedoms guarantees not only freedom of expression but also freedom of the press and other communications media.

Did you know? According to statistics by newspaperscanada.ca:

1) More Canadians read a print newspaper everyday, than eat breakfast. The figures are at 47% vs 44%

2) More Canadians read a print newspaper each week than voted in Canada’s 2011 National Election. The figures are at 73% vs 61%

3) More Canadians read an online newspaper each week than the total population of Denmark. The figures are at 5.7million, vs 5.5 million

This serves to demonstrate, that Canadians still receive a great deal of information from newspaper and traditional news sources. Thus it is important to ensure, that journalists employed under newspaper outlets and the like, are able to operate in an environment of transparency and independence.

Graeme MacKay

And according to this document  published by newspapercanada, it breaks down the market share percentage of newspapers. The findings state the top 5 newspaper companies according to % share of total paid weekly circulation:

Postmedia Network Inc – 31%
Quebecor/Sun Media/Osprey Media – 23.6%
TorStar – 11.6%
Power Corp Canada (7 papers) – 10.9%
Woodbridge Co. Ltd (1 paper) – 7.4%

However, the broadcasting industry must also be examined along with the newspaper industry, since much of the news is broadcasted via television as well. Below, are the largest and most powerful news media companies. This chart was last updated a number of years ago, before CanWest went bankrupt and was eventually bought out by Postmedia Network.

The big 5 media players (Newspaper + Broadcasting)

1) Quebecor: The most well known of the Quebecor’s newspapers, is the Sun franchise, such as Toronto/Calgary/Ottawa Sun/Edmonton/Winnipeg Sun, and the Daily Herald-Tribune, LondonFreePress, Sudbury Star, Daily Observer, and several others. The Quebecor news media company is run by the Peladeau family. In 1999, Quebecor had purchased the Sun Media chain, and in 2007, purchased the Osprey chain which includes 19 smaller Ontario dailies and many more weekly papers.

According to the data, Quebecor is the second-largest newspaper owner in Canada, with 23% of paid daily and weekly circulation. As the name implies, the company also dominates in Quebec, with ownership of cable giant Videotron, French-language television network TVA, Canoe.ca.

2) Bell Media: Out of all the other major media companies, Bell Media is an anomaly considering it is not owned by a wealthy family, operating through top executive management of board of directors with strong ties and connections to the banking and financial industries. During the 1980s, Bell was the nation’s largest telephone operator and ventured into seeking higher profits through delivering content. Bell Media’s parent company, BCE, eventually gained majority ownership in the CTV television network, along with satellite services known as Shaw Direct. Shaw is also considered to have the largest cable system in Western Canada.

3) Shaw and Corus: Owned and operated by the Shaw family, the Shaw media emprie extends across tv, cable, satellite, and home phone services. The Shaws were successful in gaining control of Global TV and CanWest’s (a past media giant) specialty channels when CanWest went bankrupt.

The Shaw empire runs 20+ specialty channels, the Shaw family, 16 stations of Global TV and the 41 radio stations of the Corus Radio Network that includes talk show hosts such as Charles Adler, and Roy Green.

4) Rogers Media: This telecommunications empire is owned by the Rogers family and includes popular tv stations such as Citytv and OMNI, along with 45 radio stations, and includes magazines such as Macleans, and Chatelaine magazines. Several Macleans writers, such as their publisher Ken Whyte, and national affairs editor Andrew Coyne, both are on the board of Peter Munk’s Aurea Foundation.  The Foundation is noted for their charity to orgaizations such as the C.D. Howe Institute, Canadian Constitution Foundation, Macdonald Laurier Institute, and think tanks such as the Fraser Institute.

5) Woodbridge: Canada’s wealthiest family lays claim to Woodbridge as their holding company. In 2011, the Thomsons had a net worth of 21.3$ billion dollars.  The media empire owns a majority stake in the Globe and Mail newspaper (85%), and runs the Reuters news agency.

In the past, the Thomsons family owned more newspapers than anyone else in the country, however the family decided to pursue other forms of information, settling on an information empire in financial and legal information as well. This is noted since in 2008, Thomson Corp. announced a merger with the Reuters News Agency, to become one of the largest news agency in the world through the distribution of global news.

The Thomsons ownership of the Globe newspaper is an interesting one, when the Thomsons retained control of the paper from the 1980s, however they lost majority control of the paper in 2001 when it merged with CTV. However, in 2010, through the holding company Woodbridge, they regained an 85% share in the paper, with BCE-Bell Media owning the remaining 15%.

These last two may not be as large as those above, however they still command a significant lead in the newspaper industry.

6) Torstar: Controlled by five families, the newspaper most popularly known under Torstar is the Toronto Star, which is widely known as Canada’s largest paper. The paper publishes a full seven days a week as well. What is interesting about Torstar is that they only own 4 papers, however they retain an 11.6% of total paid weekly circulation. This is a testamount to the tremendous amount of outreach the Toronto Star has.

 7) Postmedia Network: Some of the largest newspapers under this network include but are not limited to, the Montreal Gazette, National Post, Ottawa Citizen, Windsor Star, Vancouver Sun, Edmonton Journal, etc.

Compared to the other media companies, Postmedia is a fairly recent media company, not having existed before July 2010. Postmedia was able to acquire the CanWest papers for less than a third of what their owner (Asper) paid about a decade earlier. The Network was set up by Paul Godfrey, who was once the former head of Sun Media, before he sold it to Peladeau (Quebecor) in 1999. Paul Godfrey was able to bring together the companies that had invested in CanWest’s bonds when the company was tanking, and these companies were characterized as vulture funds.

Vulture funds are those, that look into buying the debt of troubled companies by buying them at pennies on the dollar and then reaping the rewards. In the CanWest case, vulture funds picked up the company’s debt at very depressed prices. And vulture funds are not known to be patient long-term investors. Rather, their business model seeks to expect generating profits in the 30% range as soon as possible, and then moving on.

This has led some activists to question the motives of the network, when they initiated a drastic cut in employment by eliminating 500 full-time jobs and jettisoning media properties — Victoria Times Colonist, Lower Mainland community papers. Postmedia’s investor group of is led by GoldenTree Asset Management of New York, and other non-Canadian shareholders include Alden Global Distressed Opportunities Master Fund, Bank of New York Mellon, and First Eagle Investment Management.

The Postmedia network is a giant in the newspaper industry, controlling 31% of Canadian paid daily circulation. An interesting thing about Postmedia, is that in defiance of Section 19 of the Income Tax Act, the Postmedia Network may not even be a Canadian-controlled company. The full details involve sophisticated tax and accounting methods that were used.

The Section of the Act contains a provision that allows advertisers to deduct their costs of advertising in Canadian newspapers as a business expense only when the paper is 75% owned by Canadians. Since newspapers obtain about 80% of their revenues from advertising, this requirement effectively enables a loophole to get around existing regulations. And further, to circumvent the Income Tax Act requirement, Postmedia created two classes of shares, those of voting shares that have no ownership position, and non-voting shares that own the company.

So these are the major players, part 2 in this series looks at the issue surrounding media ownership.

 Contents:

Part 2 – The Fallen Giant

Part 3 – The Opposition Attacks

Part 4 – The Committees Results

Part 5 – History Repeats

 

Comments (3)

  1. Pingback: What about a diversity of voices in newspapers? « Brett Throop writes

  2. Pingback: History Repeats – Centralization of Media Ownership in Canada – Part 5Prudent Press

  3. Pingback: Centralization in Media Ownership in Canada – Part 2Prudent Press

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