(Not) Helping Canadian Journalism

The Local Journalism Initiative (LJI) is a fund set up by the Canadian government in 2019 to “support the creation of original civic journalism that covers the diverse needs of underserved communities across Canada”.  News organizations can apply for funds to cover the salaries of newly hired reporters, if those reporters are assigned to specific beats that address “news deserts”.   To maintain editorial independence, the fund is administered by a group of news industry associations that oversee the application and adjudication process.

Media organizations everywhere are having financial problems, largely because of competition from free online content and because of advertising buys going to websites and social media. So the intent of the LJI is commendable, especially if it can help support local reporting – which, as we’ve recently seen in the US, is critical in keeping governments accountable, and in building democracy by keeping citizens informed.

But LJI funds should not be going to media organizations that have largely been the architects of their own financial misfortune – and which could also be blamed for creating the “news deserts” that the LJI is trying to fix. Two obvious examples of such organizations that LJI has funded are the newspaper chains Postmedia and Saltwire.

Jeremy Klaszus, publisher of the award-winning online publication Sprawl Calgary, posted a thread on Twitter this week, after Sprawl’s application for LJI funding was rejected for a second straight year. He noted that a number of other independent publications, such as the long-established Briarpatch, had also had their LJI applications turned down twice, despite filing an appeal to the LJI after last year’s rejections.

Klaszus was especially suspicious of his organization’s rejection this year, because Sprawl bills itself as “pop-up journalism” – and somewhere in between the 2019 and 2020 calls for LJI applications, “pop-up news organizations” was added to the list of organizations ineligible for LJI funding. As far as he knows, Sprawl is the only news organization in Canada calling itself “pop-up”.

Meanwhile, Postmedia has received enough LJI funding to hire 12 journalists across Canada, including in Alberta. Postmedia has long-term debt of more than $200 million and is largely owned by US-based hedge funds. (Full disclosure: I have worked at two newspapers that are now owned by Postmedia.)  In recent years, Postmedia has cut back or closed many community newspapers across Canada, reduced staff numbers at many of its media outlets, and has been the subject of significant concerns about its editorial independence.

In 2018, Postmedia paid its five top executives more than $10 million in compensation, including more than $2 million in “short-term incentives”.  The executives’ compensation packages also include pension payments, stock options, benefits, and “car allowances, parking, and club memberships”.

According to Halifax-based Frank magazine, Saltwire-owned newspapers have received LJI funding for at least seven reporting jobs. Saltwire was created in 2017, when the owners of the Halifax Chronicle-Herald newspaper bought 27 newspapers formerly owned by Transcontinental Printing. At the time of the $33 million purchase, the unionized journalists at the Chronicle-Herald had been on strike for more than a year because the owners claimed they could not afford the union’s bargaining demands. Saltwire is now suing Transcontinental, claiming it was misled over the value of the assets it purchased, and just announced that it is temporarily shutting all its weekly papers and laying off 40% of its staff.

(Because Saltwire is a privately held company, we don’t know how much it pays its executives.)

The newspaper industry is suffering particularly badly right now, with the loss of advertising revenue from businesses that are closed because of the coronavirus. But both Saltwire and Postmedia might not be in such dire straits if their management had not already made so many terrible strategic and financial decisions, including reducing the numbers of journalists they employ and closing newspapers that served communities for decades.

I don’t buy the argument that CEOs and executives “have to” be paid large amounts of money for their salaries to be competitive, or that companies “have to” expand to be successful. Those “have to”s are choices. Every organization has a certain amount of resources – and people within organizations choose how they allocate those resources, for executive salaries, for corporate acquisitions, or for anything else.

And in the news business, choices also affect the quality and type of information that communities and citizens receive. One of the Postmedia papers in my city chooses to run four pages every day of “C-list celebrity says something on Instagram” content. It chooses not to hire enough reporters to cover events like city or municipal council meetings or school board meetings, where important decisions are made.

To be blunt, after the recent choices that Postmedia and Saltwire have made, their asking for grant money to hire more journalists is like the apocryphal story of “the man who killed his parents and then asked the judge for mercy because he was an orphan”.  It’s not unreasonable to think, for example, that Postmedia would have the resources to hire a few more journalists if it stopped paying for things like its executives’ “car allowances” and “club memberships”.

The LJI has the potential to make some positive and much-needed changes to the Canadian media industry. But it won’t achieve that potential by giving grants to companies like Postmedia and Saltwire that have contributed to the devastation in that industry. Local independent media organizations like Sprawl and Briarpatch are much more deserving of LJI funding. Supporting those types of organizations would develop regionally-based journalism expertise and knowledge, and that would likely go a long way toward achieving the LJI’s intended outcomes. The LJI should be doing some serious self-examination about where its funding is going.

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