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The Shattered Mirror, Part Three: Why Income Tax Changes for Digital Advertising Won’t Save Local Media

The third part of my critique of The Shattered Mirror: News, Democracy and Trust in the Digital Age, the Public Policy Forum’s report on the future of media, has taken longer than anticipated. In the interim, there have been some excellent posts on the report, including those from Andrew Potter, Dwayne Winseck, and Marc Edge. The first two parts of my review focused on the copyright and CBC/open licensing recommendations. This post discusses the report’s most significant financial recommendation: reforms to the Income Tax Act that would be designed to increase or capture digital advertising costs with Google and Facebook accompanied by a scheme to create a fund to support Canadian media.  The recommendation is similar – though not identical – to one floated by communications law veterans Peter Miller and David Keeble in a report commissioned by the Friends of Canadian Broadcasting (FCB).

At the heart of both reports is the recommendation that advertising purchased on foreign Internet-based media should not be tax deductible. The reports offer a tempting vision for those seeking a simple solution to the struggles of Canadian media organizations. Both posit that much of the problem lies largely with the dominance of Google and Facebook in the digital advertising market. According to the FCB report:

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February 17, 2017 4 comments News
Our Beloved Phone Company by Dennis S. Hurd (CC BY-NC-ND 2.0) https://flic.kr/p/8v9Mm9

Why the Wireless Industry Fears Bill Transparency and Bans on Unlocking Fees

The National Post has a story today on a research note written by Maher Yaghi, a telecom analyst, warning about the “regulatory risks” of the CRTC’s review of the wireless code. The article focuses on a single analyst, but there is a long tradition in Canada of the industry saying one thing to the regulator and another to the business community (see, for example, Bell’s position on investing in fibre networks) so the comments likely reflect industry concerns. What regulatory risks might arise from changes to the wireless code?

Yaghi cites two concerns that lay plain why the industry has been fighting potential changes. The issue is not, as some would have you believe, increased regulatory costs. Rather, the fear is that changes would create better informed consumers who would seek cheaper pricing and be freer to take advantage of marketplace competition.

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February 14, 2017 10 comments News
22 NAFTA Style by Steven Taylor (CC BY-NC-ND 2.0) https://flic.kr/p/CSNKez

Canadian Senate Report Emphasizes Need for Consultation, Transparency in Trade Talks

Prime Minister Justin Trudeau meets U.S. President Donald Trump today with trade issues sure to be a key part of the agenda. With the TPP now dead and NAFTA headed to renegotiation, the arrival of a Trump administration has had a dramatic impact on Canadian trade policy.  Last November, I wrote a piece in the Globe and Mail arguing that Canada’s trade negotiation strategy needed to focus more on the how of trade negotiations than the who:

the how of negotiation may be more important than the who. The public backlash against trade deals points to a process that leaves many feeling excluded and to terms that are presented publicly for the first time as final. The real opportunity for Ottawa is not just to explore new trade partners but to challenge some of the long-standing assumptions about such deals in order to foster greater public confidence in the outcome.

The column continued by suggesting that the government “ensure that the same emphasis on transparency and public consultation that is emblematic of domestic policy development is mirrored in the trade file.”

Last week, the Standing Senate Committee on Foreign Affairs and International Trade issued a report on free trade agreements, which it described as “a tool for economic prosperity.”

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February 13, 2017 2 comments News
Trump International Beach Resort by Leigh Caldwell (CC BY 2.0) https://flic.kr/p/8LiWWV

Canadian Privacy in the Age of Trump

Last night I appeared on TVO’s The Agenda with Steve Paikin to discuss privacy issues in light of the Trump Executive Order that eliminates Privacy Act protections for non-U.S. citizens or permanent residents. A video of the discussion is embedded below.

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February 9, 2017 9 comments News
Super Bowl LIVE LI by Texas.713 (CC BY-NC 2.0) https://flic.kr/p/QwnUco

The Future of Simsub Post-Super Bowl: Why Canadian Viewership Data Vindicated the CRTC

The release of the television ratings for the Super Bowl unsurprisingly sparked a wave of reports yesterday blaming the CRTC for a decline of viewers at CTV.  The Hollywood Reporter claimed there was a ratings collapse, the National Post talked about a 39 percent drop, and Cartt.ca argued that the CRTC had failed Cancon with its decision. While CTV’s numbers may have dropped by 39 percent from the 2016 Super Bowl, that number on its own means as much as saying that Tom Brady’s quarterback rating dropped from his last Super Bowl appearance (it did).

When assessing the impact of the CRTC’s simultaneous substitution decision that opened the door to competing U.S. and Canadian feeds for the game (but not for the pre and post-game broadcasts), the far more important number is the Canadian audience for the U.S. feed. It tells the story of how many switched away from CTV to the newly available alternative. Although Bell indicated that this data is not available, that does not appear to be accurate. The Globe and Mail reports today that some Fox stations are measured in Canada, but that Numeris did not provide it with the numbers.

However, Richard Deitsch, the lead media reporter for Sports Illustrated, tweeted on Monday that the CTV feed drew 4.5 million viewers, while the U.S. Fox viewed garnered 803,000 in Canada. Deitsch’s source for the report was Sportnet’s John Shannon, a longstanding sports television producer, who discussed the issue on the Prime Time Sports program on Monday afternoon. The Fox number may involve some guesswork given that Numeris does not track all Fox affiliates in Canada, but I am reliably advised that its data showed low numbers for some U.S. affiliates, including the Buffalo Fox affiliate feed [update 2/9: new reports indicate that the Buffalo number may be in error, suggesting a higher number of Fox viewers in Canada that reported by Shannon/Deitsch. CTV still retained a majority of the Canadian audience].

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February 8, 2017 13 comments News