Nearly a Fifth of All Canada Periodical Fund Payouts Went to One Company

Parsing Federal Government Support for Journalism

I’ve got questions.

1. Should governments be in the business of subsidizing journalism?

2. Do government subsidies undermine journalists’ independence?

3. If they do undermine journalists’ independence, would that necessarily be a bad thing? After all, who’s still reading the stuff they write? Which I guess brings us back to question (1).

Now don’t get your hopes up. I have no intention of actually answering those questions. At least not here. But I will take a deep dive into one rather expensive tool in the government’s subsidy arsenal: the Canada Periodical Fund (CPF). On the whole, I think the program is working quite well - with the possible exception of some very well-financed operations drinking a bit too deeply at the trough.

Important (dis)claimer: The Audit has never accepted a penny of government funding.

Since 2009, the CPF approved 7,799 individual grants adding up to more than $663 million. As you can see from the chart, yearly funding levels have been fairly steady at around $70 million since 2015. I assume that the lack of data for the COVID fun times of 2020 reflects the bookkeeping adjustments necessary to accommodate special emergency funding.

All the numbers in this post come from the government's Open Government Grants and Contributions dataset.

Public funding for periodicals in Canada is a lot older than some might suspect. For more than a century, for instance, the Publications Assistance Program required the post office (now Canada Post) to subsidize periodical distribution. More recently, the Canada Magazine Fund advanced similar goals. The modern CPF’s scope is limited to just print magazines, digital periodicals, and non-daily community newspapers.

Don’t confuse the CPF with some other federal government programs, including their Local Journalism Initiative - which funds third-party organizations supporting reporting at the local level - or the Labour Tax Credit, a refundable tax credit that’s currently equal to 35% of the salaries or wages an organization pays, up to a maximum of $85,000 per eligible newsroom employee per year.

Typical use-cases

Many of the recipients of those 7,799 grants are owned by larger media players. For instance, Black Press Media received 79 grants totaling nearly two million dollars in 2023. Each of those 79 grants was earmarked for a different small community newspaper, like the Prince Rupert Northern View or Nunavut News North. I checked out a few Black Press websites and, while they share common IT infrastructure, they all do seem to be delivering original and up-to-date local news reporting.

The overall average grant for a Black Press property was around $25,000, which is hardly enough to fund an entire paper.

System-wide, 75 percent of all CPF grants were below $63,000.

Media companies using similar models included Metroland Media Group (63 grants in 2023 for its papers, including the Scarborough Mirror), and 20 grants for Postmedia properties. A $812,365 grant for Postmedia’s Ontario Farmer stood out from the others for its size. Postmedia obviously also owns much larger papers like the National Post and the Ottawa Citizen, but those aren’t eligible for the CPF.

Should smaller operations like the Scarborough Mirror and the Prince Rupert Northern View receive this level of government funding? I can see some compelling arguments in support of the current policy.

However, the CPF has another very different class of customer, and that’s who we’ll visit next.

Atypical use-cases

If the large majority of grant recipients are small businesses struggling to survive, there are also a few very large fish swimming around in this tank. The one that stands out for having hoovered up more than 18 percent ($121,000,449) of all historical CPF funding is Quebecor Media.

You’ve probably heard of the parent company: Quebecor. With a market capitalization of nearly six billion dollars, they’re kinda hard to miss. Besides the mobile, cable, and internet provider Vidéotron, they’re also in control of Groupe TVA. Groupe TVA, in turn, owns TVA Publishing Inc. who produce around 70 magazine titles for both English and French markets. Right now Quebecor is doing nicely, thank you. They’ve got plenty of cash, healthy earnings, and a solid profit margin of around 24 percent.

Are the 20 TVA titles that receive CPF grants each year really eligible for funding according to current rules? Probably. But could Quebecor perhaps find enough of its own money to replace the six to seven million dollars they annually take from His Majesty’s treasury? I’ll bet they could.

Perhaps CPF rules should be tightened to improve the program’s focus. Although, with the political clout in play here, I doubt that’s in the cards.

Other players

While they’re not in the same league as Quebecor, privately-owned St. Joseph Communications have also received significant payouts adding up to at least $10 million over the past few years. Those are aimed at St. Joseph’s magazines including Macleans, Chatelaine, (and Châtelaine).

The Walrus - a general interest magazine - is another large recipient. Since 2018, they received around $3.4 million (around 11 percent of its total revenue) from CPF grants. According to 2023 charity filings, no more than 47 percent of their budget was covered by normal business revenue (like subscriptions).

The Local Journalism Initiative and Labour Tax Credit do probably deserve their own closer look. But overall, I'm included to believe that the CPF itself does a reasonable job serving an important function in Canadian civic life. A few tweaks might make things more effective, but I've seen far worse abuses of government funds.