Jan 18, 2010

Will CanWest’s bankruptcy lead to more media concentration or new opportunities?


There is an old political adage that you should never argue with someone who buys their ink by the barrel.  Let’s ignore that good advice for a minute and talk about the CanWest bankruptcy.

CanWest, Canada’s largest media company, filed for bankruptcy protection for its assets which include all of CanWest’s newspaper publishing and associated digital media, online and mobile operations, with the exception of National Post.

This becomes interesting because of the conversation that is not taking place.  Forty years ago there was a real concern in Canada about growing media concentration.  This resulted in the 1970 three volume report of the Special Senate Committee on the Mass Media (the Davey Commission) that still makes interesting reading.  The Committee report worried that:

Of the 103 survey communities, there are 61 where groups or independents own two or more of the community’s media outlets.  There are 34 communities where groups own two or more radio stations.

The two biggest newspaper chains at the time, Southam and F.P. controlled 18.2% and 18.0% respectively of the Canadian market.  The Committee concluded:

This country should no longer tolerate a situation where the public interest in so vital a field as information is dependent on the greed or goodwill of an extremely privileged group of businessmen.

Nothing much changed to encourage competition in the media following the report.  Ten years later there was another study on the media, this time a Royal Commission chaired by Tom Kent.  As the forward to the Royal Commission on Newspapers explains:

This commission was born out of shock and trauma.  Simultaneously, in Ottawa and Winnipeg, two old and respected newspapers died…Thoughtful people throughout the country became seriously concerned, for the demise of the Journal and the Tribune was merely the culmination of a series of takeovers and “rationalizations” that have changed the face and nature of the press in Canada.

The Committee reported that Southam’s control of newspaper circulation had risen to nearly 33% in the previous ten years.  In the previous 12 years market domination by chains had grown from 58% to 77%.

Since then the domination of Canada’s media has only become more pronounced.  Southam continued buying up local newspapers, then Conrad Black bought Southam, then, in turn, CanWest bought the Conrad Black newspapers.  As the online Canadian Encyclopedia expresses it:

Ever since tycoon Conrad Black gained control of the Southam chain of papers in 1996, there’s been so much deal-making that almost all major newspapers and most minor ones have gone through at least one new set of owners. Ontario’s Guelph Mercury, to cite an extreme example, changed hands five times in four years.

In 2006 yet another Senate report on the media complained once more about concentration.

Here in Vancouver CanWest owns the Vancouver Sun and Province, as well as the “Now” group, the Delta Optimist, the North Shore and the Richmond News, the Vancouver Courier and Global TV.  Other than increased media concentration there has been one more change since the 1970s.  Back then chain owners told the inquiries that they never interfered with local control of the papers.  In 2001 CanWest announced a new policy to run uniform national editorials and preventing local newspapers from taking local positions on those issues. 

In 2002 the International Federation of Journalists condemned CanWest saying:

CanWest has suspended journalists for talking to outside media and disciplined others for protesting over internal censorship. Journalists throughout the group – which includes newspapers and television outlets across Canada – have also been angered by the imposition of corporate editorials that destroy local editorial independence.

So now that CanWest is in bankruptcy and its papers for sale, let’s go back to some of the recommendations of those reports from 30 and 40 years ago.

The Davey Commission called for a press ownership review board that would have the power to accept or reject media mergers and acquisitions.  Its major guideline was to be that:

all transactions that increase concentration of ownership in the mass media are undesirable and contrary to the public interest – unless shown to be otherwise.

The Kent Commission made a number of recommendations to reduce media concentration including a call to prevent the expansion of existing chains owning five or more newspapers.  The report suggested the breakup of regional monopolies and limits on cross ownership of different medias.  They also called for chains to have contracts with their editors guranteeing editorial independence.

So how is it that now, when Canada’s largest media organization is in trouble, there is no discussion at all of taking this opportunity to reduce media concentration? 

It is an interesting example of how gradually, over the last 40 years, the range of public policy options has been narrowed.  It is now hard for most people to even imagine that government would consider taking steps to reduce the concentration of the media.

But we need to be thinking about the issue now.  Although there appears to be a bid today for part of the chain, CanWest is seeking a buyer for its entire newspaper publishing unit.  Who has those kinds of deep pockets?  Surely it would be someone already deeply in the media business.  Perhaps it will be a Canadian company and we will see even more concentration.  On the other hand, how likely is the Conservative government, closely linked to CanWest, to stop an offer by a foreign media conglomerate that would put a very large percentage of the Canadian media in foreign hands?