Charity no way to save La Presse nor Canadian journalism by Alan Freeman

May 11, 2018

Source: iPolitics

"What’s particularly disturbing about this week’s announcement is that La Presse’s management now thinks it can replace the old sugar daddy with a new one, the federal government."

Can the news media survive as a self-sustaining industry in Canada? Judging from the announcement this week by the Desmarais family that it was cutting its ties to La Presse and planning to give the newspaper over to a non-profit foundation, the answer is no.

Power Corp. of Canada, the Desmarais family-controlled financial conglomerate, has clearly decided it has had enough of the losses being racked up by La Presse even though it won’t say how much red ink the paper is bleeding. And that’s after it sank at least $40-million into a risky bet on transforming the newspaper to a tablet-only edition, which despite all the self-congratulations since it was set up in 2013, has clearly proven to be a financial failure.

The losses are obviously serious, so much so that Power Corp. is willing to offer a $50-million dowry and support existing employee pension obligations just to get the thing off its books once and for all.

Over the past half century, the Desmarais and Power Corp. have been particularly generous owners of La Presse. I’m sure the paper once made good money for Power Corp. but that was long ago. Newspapers have been in decline for years yet the company kept on supporting the paper, hiding its losses under “other” investments in the Power Corp. annual report. (It wasn’t as tolerant of its six other Quebec dailies, dumping them for a song in 2015 in a “sale” to Martin Cauchon, a former Liberal cabinet minister. Cauchon recently got a $10-million bailout from the Quebec government to keep the chain going.)

Power Corp. was a particularly generous employer as well. For many years, journalists at La Presse had a four-day work week, unheard of elsewhere. I remember a colleague at La Presse who got a full salary for his four days working on as a reporter, and on the fifth day, moonlighted at La Presse and got extra pay for doing so. Nice work if you could get it.

And despite their major influence on Quebec politics and the economy, the Desmarais were relatively benevolent in their attitude to press freedom, seldom sticking their noses into editorial decision-making.

In other words, the Desmarais were the best kind of sugar daddy.

What’s particularly disturbing about this week’s announcement is that La Presse’s management now thinks it can replace the old sugar daddy with a new one, the federal government.

The Liberals announced in the February budget that it was going to study the possibility of allowing newspapers to convert into non-profit entities and use their newfound philanthropic status to raise money. How that will work exactly remains to be seen but the new La Presse trust would clearly be structured to follow those rules.

But La Presse seems to want more, lots more.

“We’re asking for direct (government) assistance so we can continue to offer quality information to support our operations,” says La Presse’s president, Pierre-Elliott Levasseur, who complains (rightly) that Google and Facebook are vacuuming up 80 per cent of advertising revenue online, starving traditional media.

And what about press freedom? Levasseur doesn’t seem to worry. He says there’s long been a Chinese wall between advertisers and the editorial staff. That should be sufficient.

What Levasseur won’t do is ask readers to pay. There are no plans to re-install any sort of paywall, convinced that there are too few Francophone readers willing to shell out cash for news.

But Levasseur is dreaming if he thinks Ottawa will save La Presse or newspapers in general. The only cash that the federal government is promising is $10-million per year for the next five years to support local news coverage. I suggest La Presse get in line behind every daily and weekly in the country from Kamloops to Sept-Isles with its begging bowl. It will be lucky if it gets a few hundred thousand dollars from that pot.

And Ottawa, which already spends more $1-billion a year on the CBC, is unlikely to pony up hundreds of millions more on big newspapers like La Presse, even they’re non-profits.

What’s unfortunate is that La Presse took such a foolhardy plunge into the world of tablets, placing all its money on a single revenue stream, linked to a single platform. It turns out that readers, especially young readers, access news primarily through their phones so the fancy La Presse Plus platform is wasted on them. At the same time, by stopping the print edition of the paper, it cut itself off from a substantial, if declining source of cash. And it also refused to charge readers for content.

If you offer great editorial products, readers should be willing to pay, even skinflint Canadians. The New York Times earned US$1-billion last in subscription revenues last year. It now has 2.6 million digital-only subscribers, accounting for 60 per cent of total revenue.

And it also brought in $320-million in print ads to the Old Grey Lady in 2017. La Presse, by contrast, has basically cut itself off from both sources of revenue by not printing the paper and not charging readers a dime for content.

As of last September, The Washington Post had 1 million digital subscribers, doubling that number in less than a year. And its owner, Jeff Bezos, insists he isn’t running a charity. “This is not a philanthropic endeavour. For me, I really believe a healthy newspaper that has an independent newsroom should be self-sustaining.” However, Bezos, the founder of Amazon, harnessed that company’s unparalleled online selling platform to create the Arc Publishing platform, which uses proprietary advanced analytics and artificial intelligence to sell you the news you want at a price only it knows you’re willing to pay. So much for the democratizing effects of the internet. What Bezos has is wildly expensive technology, taking us back to the days of print barons.

Of course, both The Times and The Post are also benefitting from the Trump effect, which has intelligent readers hooked on the news, and willing to pay if it comes from a reliable source. Canada, thankfully, faces no such immediate threat to our democracy but we still need well-financed sources of news that are independent of government. Do the publishers of La Presse really want to be dependent on a possibly capricious, journalist-bating government for its major source of funding in the future?

Maybe it’s time for La Presse to drop its search for a sugar daddy, radically slim down and fight for reader loyalty.

© iPolitics