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Postmedia Expects at Least $8 Million in Taxpayer Subsidies

Focus is still on cutting costs, says CEO. Big winners seem to be US hedge funds.

Paul Willcocks 11 Jul 2019TheTyee.ca

Paul Willcocks is a journalist and former publisher of newspapers, and now an editor with The Tyee.

It’s not surprising that the first real information about the federal government’s subsidies for news media would come from Postmedia. Traditional media organizations have been lobbying for a bailout.

The floundering corporation released its quarterly results Wednesday. They were bleak, as they have been every quarter since 2010 when Postmedia became Canada’s major newspaper owner.

But the corporation shared good news, at least from its perspective. Postmedia expects to get $8 million to $10 million this year from taxpayers under the federal government’s subsidy program to support “a strong and independent news media.”

Based on a Bloomberg News report, that is about 20 per cent of total program funding in year one.

And it’s an interestingly precise forecast, since no details about the subsidies have been released and the panel to establish eligibility was created less than two months ago.

Once I would have scorned the idea that news media companies should accept government subsidies. Readers would never be able to trust our impartiality if we counted on them.

These are desperate times. Maybe we bend, and look for smart ways to support reporting and commentary essential for a functioning democracy, including government supports.

But handing money to Postmedia doesn’t seem smart.

Not because journalists employed by the corporation don’t do important work. In Vancouver and across Canada, Postmedia journalists report on issues that matter, and would otherwise be ignored. Their ranks are diminished and their owners have undermined their credibility. But as a society we are better off with their work.

But the government’s money — your money — won’t pay for more reporting, or journalists. Postmedia gets the subsidy even if it continues to cut jobs. And that appears to be its plan.

In the corporation’s conference call on the quarterly results, Postmedia CEO Andrew MacLeod touted the continued double-digit growth in digital revenues.

But that growth added $3 million in revenues in the most recent quarter. Print advertising fell by $13.8 million, subscription revenue by $3.4 million.

So revenue fell by $14 million. Operating expenses were cut by $11 million. MacLeod said the solution was more cuts. And Postmedia’s future looked bleaker.

Subsidizing Postmedia might make sense if the goal was to preserve its 15 daily newspapers while the corporation found a new path forward.

But there is no clear path. Postmedia’s primary goal is to generate enough cash each quarter to pay the interest on the loans from its U.S. hedge fund owners.

Postmedia’s calls on quarterly results have attracted few questions. The usual participants are analysts tracking stocks, but Postmedia is really privately owned.

But Wednesday, Leon Cooperman called in. He’s a 76-year-old billionaire who owns about 14 per cent of Postmedia. Could MacLeod and the management team say when the corporation would return to profitability, he asked?

No, said MacLeod. Postmedia will keep cutting costs, and see what happens.

Which should worry Canadian taxpayers. The $8 million to $10 million a year Postmedia expects to collect should create new jobs for journalists. How do they know the money won’t simply be sent as interest payments to U.S. hedge funds that saw an opportunity in a failing media company?

They don’t.  [Tyee]

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