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1:22

How does a profitable company justify these

1:24

layoffs, particularly in light of the hundreds

1:27

of millions of dollars in subsidies from

1:29

the government? When we make our decisions,

1:31

we have our consumers front of mind,

1:34

investments we need to make to better

1:36

serve consumers. And we're doing

1:38

this in an environment with, as I

1:41

said earlier, increasing costs, bad

1:43

foreign exchange, high inflation, increased

1:46

competition. Which is a bit of a mis-summing you

1:48

said. So we have to manage all that. Just

1:50

to understand, did you say that your justification for

1:53

laying off workers is because you had

1:55

the consumers in mind? I

1:57

must have misheard that because that does not make any sense at all to

1:59

me. Oh, it makes very good sense

2:02

because what we're trying to do is continue

2:04

to grow. You fired 6,000 workers because you're

2:06

worried about consumers. If I

2:08

may, correct. I'm at hard time

2:10

understanding that. We

2:13

need to adjust to the macroeconomic environment

2:15

around us. How do we fix Canadian

2:18

media? Because without a

2:20

Canadian broadcasting system, there will be no

2:22

news, except maybe the CBC. Thank you.

2:24

To figure out how to keep Canadian

2:26

news alive. Oh

2:30

no, there'll be no news without a

2:33

Canadian broadcasting system. That's it. The

2:35

news is done. Nothing more will happen.

2:37

If it does happen, we won't know about it because we

2:39

only know about what happens in the news because of the

2:41

Canadian broadcasting system. Don't blame

2:43

Mirko Bibbik of Bell, who you just heard,

2:46

defending his little

2:49

company to parliament, getting into a bit

2:51

of an argument there with NDP leader Jagmeet Singh.

2:54

No, it's the system that's broken.

2:56

That is why we're about

2:58

to be without news. But

3:01

is that true at all? Is

3:05

this the fault of just external

3:07

forces beyond anyone's control, technology, breaking

3:10

the news model? Is

3:12

this somebody else's fault, as

3:14

the CEO of Bell Canada was arguing? Maybe

3:17

not. Today, we're going to bring

3:19

you a totally different perspective on

3:22

how we got to the situation we're in

3:24

right now. I have

3:26

looked and discussed again and again

3:28

at the impact of social

3:30

media and Google and Facebook on the

3:32

news business. But

3:35

the story doesn't begin with those companies.

3:38

The story of the downfall of Canadian

3:40

news might begin earlier

3:42

than that. Back in

3:44

the 90s, when Canadian

3:46

media companies made

3:49

a bad, bad bet.

3:52

And as you're going to hear, when that

3:54

bet failed to pay off, they

3:57

doubled down. Again. And

4:00

again and again and that

4:03

debt just got bigger and bigger

4:05

and now who is

4:08

holding the bill for that

4:10

debt the news industry in

4:12

other words. It's a setup

4:15

in a minute i'm gonna sit down with

4:17

our reporter suree suturin who's gonna tell

4:19

you all about it. Will for it. This

4:31

episode of Canada land is brought to you by Ari

4:33

Henkin Alexandra Leiske Celine

4:36

Lacroix Marie Eve

4:38

Belanger Jordan house Milka

4:40

stupar David potkin and

4:43

Alex. My name is Alex. I'm a

4:45

tech writer living in Ottawa Ontario and I support candleland because

4:47

I'm sick of hearing about journals getting laid off media

4:50

giants keep showing that they view journalism as

4:52

a bottom line Bergen resident social responsibility and

4:55

programs like commons have taught me a lot about

4:57

hockey stock buybacks. And unfortunately

4:59

Snape wives I'm going to be

5:01

tuning in every week for the new season of work and as

5:03

a subscriber I get to hear before everyone else so I like

5:06

that keep up the good work guys. Hey

5:11

Jesse. Hey Charisse. So

5:13

I want to do a little activity

5:16

here I want to take a

5:18

stroll through the Canadian news media

5:20

graveyard. Do you

5:23

remember Toronto one Toronto

5:25

one it looked very briefly.

5:28

It was envisioned as a Toronto TV

5:30

station with local programming and content first

5:32

owned by Craig media then it was

5:34

bought by chum and it was bought

5:37

by Beck or now it exists as

5:39

fun news with completely different sort of

5:41

Fox style content. I have vague memories.

5:43

There's a lot in this media graveyard.

5:45

It's sort of a necropolis. It's vast.

5:47

It really is speaking of chum. Do

5:49

you remember chum course I remember chum

5:51

a beloved network of radio and TV

5:54

that was pretty iconic for a time.

5:56

There is still a radio station under

5:58

the chum name but the original. network

6:00

of media was broken up into parts now

6:03

owned by different corporations. Are

6:05

there other things in this graveyard of

6:07

delights, Jesse? I mean, much

6:09

music. The Grid, the Georgia Strait.

6:12

Now magazine is dead. There was

6:14

something called the Toronto Standard. There

6:17

was Toronto Ist. Well, National have

6:19

got, I mean, Vice Canada, BuzzFeed

6:21

Canada, more recently W5. Bloomberg

6:25

TV. Bloomberg TV, yeah. I

6:27

mean, I really could go on. I could

6:29

go on forever. It's a very crowded

6:31

graveyard we're walking through currently. And some

6:33

of these things aren't actually dead yet.

6:36

Like much music, they're still around in

6:38

name, but they're kind

6:40

of shadows of their former selves,

6:43

zombies, basically. I

6:47

can't handle and or talked a lot about this before

6:49

covering how all of these media

6:51

companies have lived and died over the years.

6:54

But Jesse, I think we may have

6:56

missed something. How dare you? What?

6:59

So not long after the major bell cuts

7:01

happened in February, I had a source who

7:03

works in finance and he reached

7:06

out and he said more layoffs at

7:08

Bell are coming. Not even a week

7:10

later, Bell laid off 400 more

7:13

workers. And according to their union, this

7:15

was done through this virtual group meeting

7:17

where people weren't allowed to say anything.

7:26

And so I asked my source how he knew this

7:28

would happen. He told

7:31

me that Bell and other

7:33

Canadian media corporations had

7:35

made some decisions years ago that's

7:38

now impacting their balance sheets today.

7:40

And it's something that

7:42

investors are concerned about. Jesse,

7:45

they're in a boatload of debt. I

7:48

mean, don't all corporations,

7:50

even successful corporations, take on debt?

7:52

That's just a part of

7:54

being a big corporation. Yeah, you're absolutely

7:56

right. Every major corporation has a lot

7:59

of debt. at billions and billions of

8:01

dollars. The problem is that it's old

8:03

debt from moves that they made

8:05

way before the downturn of journalism. What

8:08

do you mean? What were these moves they made before

8:11

the bottom fell out of traditional media? So the

8:13

answer to that question is kind of like something

8:15

out of a movie. It's

8:19

the story of a crazy idea that

8:22

had a little bit of a cultish following, which

8:25

all ended up going up in

8:27

flames. So to tell the

8:29

story, I spoke to Dwayne Wintsek. He's

8:32

a professor at the School of Journalism and

8:34

Communication at Carleton, and he's also

8:36

the director of the Global Media and

8:38

Internet Concentration Project. The

8:42

idea was that convergence

8:44

between telecommunications and the media and

8:47

internet services was going to be

8:49

the wave of the future. And

8:52

that the internet would really

8:54

be nothing but a bunch of blank

8:56

gray screens, according to Bronfman,

8:59

who was heading up Seagrams at

9:01

the time, and Universal Music. And

9:03

without content, internet companies would basically

9:05

be dead in the water, and

9:08

people would be left unamused by

9:10

the internet. And so the

9:13

logic was that companies

9:15

had to move deeply into

9:18

the media industries to gain access to

9:20

the content that would allow the internet

9:22

to flourish. So people being

9:25

unamused by the internet, that was the

9:27

big danger they were afraid of, that

9:29

people wouldn't be entertained enough by screens.

9:31

But during this time, a number of

9:33

major mergers happened. So in 95, there

9:35

was a big merger between Disney and

9:38

ABC, 2004, NBC Universal. But

9:42

the biggest merger to come out of this period

9:44

by far was the AOL Time Warner merger in

9:46

2000. Do you remember

9:48

AOL? I

9:53

think I probably still have about 100 free CDs that

9:56

were mailed, that were covering the...

10:00

streets during the heyday of America

10:02

Online. Back in the 2000s, AOL,

10:05

Time Warner, was basically a model

10:07

after which Canadian media companies copied.

10:10

The major industry leaders had

10:13

stars in their eyes, convergent

10:15

streams were running amuck.

10:17

And you saw people like Gene

10:19

Monti, the CEO of Bell Canada

10:21

at the time, rush down to

10:23

speak to his counterparts at AOL

10:26

and Time Warner in New York.

10:28

Gerald Levin and Stephen Chase, Pierre

10:30

Carl Peledot, followed suit there afterwards.

10:32

And they went to New York

10:34

on kind of on bended knees

10:36

to listen to the wisdom

10:38

about convergence. And they brought that home

10:41

and they tried to pursue the

10:43

same dream here in Canada. And

10:45

this was when Bell Canada made

10:47

its first move into the media

10:49

industries by acquiring CTV in 2000

10:52

in the Globe and Mail around the

10:54

same time. And

10:57

it was a time

10:59

in which we saw

11:01

Pierre Carl Peledot acquire

11:03

Videotron and TVR and

11:05

move really from being

11:07

a newspaper and magazine

11:09

publisher really into the heart

11:11

of the media and the telecommunications industry.

11:14

I guess if you are a

11:16

telecom back at the early

11:19

birth of the internet and

11:21

you can't conceive of an internet where

11:23

the people who use it are actually amusing each

11:25

other and you've got a very mass media mindset

11:28

about it, then you're

11:30

thinking, how am I going

11:32

to get people to use this

11:34

telecom service I provide? I

11:37

got to get a lot of content on there. People

11:39

want professional content. And that's why

11:41

you've got PKP and Bell

11:43

and all the telecoms rushing to

11:45

acquire content companies. It

11:48

seems hilarious now with this

11:50

overwhelming ocean of content, the

11:52

least of which is what is being made

11:54

by traditional legacy broadcasters. But at the time, if

11:57

you own internet pipes and you're building

12:00

internet infrastructure. Shit, we got to put some

12:02

content on there, so let's gobble up local

12:04

news." And I had never even thought

12:06

about that. Yeah, yeah, that was the solve for the

12:09

internet problem that didn't really exist. But

12:11

it makes sense, because at the time,

12:13

yeah, like, they wanted the internet to

12:16

be successful. I remember that attitude. I remember

12:18

that those of us who are sort of

12:20

like, I don't know, internet grassroots

12:22

and like, oh, the people's medium were kind

12:24

of laughed at by slick media people. Like,

12:26

oh, like, like, it's nothing like you're saying, like,

12:28

in the future, everyone's gonna read zines that

12:30

I photo-con... It's like, no, they're not. They're gonna

12:33

watch network television just on the internet. And

12:35

it was thought of as an impossibility

12:38

that like, citizen journalists or independent artists

12:40

or, you know, like,

12:42

you would get laughed at by Joe Prose. So

12:44

I do remember that, that attitude. I never thought

12:46

of it from the perspective of the telecoms before

12:48

this conversation. And there are actually a few reasons

12:50

why they thought convergence would make sense. One,

12:52

because they thought advertisers would

12:55

naturally want to spend more, because there were

12:57

more platforms they could spend it on. So

13:00

they were hoping to rake in advertising

13:02

money. They also thought that by combining

13:04

radio, newspapers, and TV, it would become

13:07

more cost-effective. Because say you have a news

13:09

story, you can easily push that

13:11

out on all three platforms and

13:13

not spend as much. It's easy

13:15

to laugh at them now, but I also

13:17

think that, just to try to see this

13:19

from their perspective, from where they were standing

13:21

at the time, this followed a

13:23

period where media

13:26

empires, consolidation

13:28

chains, were incredibly

13:30

profitable. Where you went from

13:33

like, a local

13:35

newspaper to a chain of newspapers, and then the

13:37

economies of scale were such that you could kind

13:39

of like, make it a lot

13:42

more profitable that way. And then if you gobble up

13:44

a bunch of radio stations as well, and then you

13:46

get into cable TV. So these major empires, and we

13:48

remember like the Aspers and all these different people in

13:50

Canada, that was an effective business model. And I think

13:52

that it's totally understandable that they would look at the

13:54

internet and say, that's the next piece.

14:02

But as we know at this

14:05

point in time, convergence didn't pan

14:07

out. And that's for a

14:09

bunch of reasons as well because advertising spending

14:12

didn't go up. It actually went down

14:15

because advertisers saw all of these media

14:17

companies in a package and

14:19

they thought they should get a deal for

14:22

it. And it makes sense because if I'm

14:24

an advertiser, you don't give me a deal.

14:26

Cheaper by the dozen and kind of a

14:28

deal on fries with that. Exactly. The second

14:30

reason was because combining radio, newspapers and TV

14:33

didn't actually end up being cost effective

14:35

because they're made differently. So the

14:37

idea held by accountants that in

14:39

engineers that you could just kind

14:41

of mush all this together and

14:43

call it a convergence package, you

14:45

know, really didn't pay attention to

14:48

the realities on the ground as

14:50

to what it actually takes to

14:52

be successful in the cultural industries,

14:54

which under the best of times

14:56

are very risky businesses. These

14:58

are very different kinds of businesses. Very much so. I

15:00

remember like when it was like, oh, this is going

15:02

to be great. You'll just send a reporter out. They'll

15:04

have a camera. They'll make the TV clip. They'll

15:07

do the radio. They'll also do the print

15:09

piece. Like this was going to be the journalists of

15:11

the future was going to be like kind of multimedia

15:13

and also media magnolia. And

15:15

that has never worked. And it's

15:18

always fallen apart because what you need to

15:20

do to get good television is very different

15:22

than what you need to do to get

15:24

good audio is different than what you need.

15:26

Like every attempt to find synergies like that

15:28

has kind of like degraded

15:30

the product. It's an old story of

15:32

a big company like Rogers buying

15:34

a profitable small blog

15:37

website or podcast company because the way

15:39

that they do business at that scale

15:42

doesn't work for a business that was built to

15:44

operate in a much smaller, more modest way. Yeah,

15:47

exactly. I mean, if only they had asked the

15:49

actual creators of these things, what would happen? Anyway.

15:53

No respect at all. No, we get no respect. So

15:56

media corporations start to realize they've made a bad bet

15:59

and they say, That millions and

16:01

billions making it. Well.

16:03

The big poster child of convergence

16:05

a o' Time Warner imploded and

16:07

over the next several years Aol

16:09

Time Warner tried to can regain

16:11

its footing. So what they were

16:14

doing was the are really pairing

16:16

Bad Time Warner to it's former

16:18

glory days in the film industry.

16:20

You know, Juri Lab and ah,

16:22

who is the Ceo. Time Warner

16:24

at the Time is receiving chase

16:26

and in he goes off and

16:28

spends time in a monastery in

16:30

California for the next couple years.

16:33

Decide. To regain his soul and

16:35

his senses who he is as a

16:37

man in his place in the world

16:39

after having been completely to looted by

16:42

the for Austin the glitter and gold

16:44

of money on wall street's so you

16:46

know very interesting times I'm I'm having

16:49

a vision here of of Don Draper.

16:51

At esl one of the end of Madmen. But.

16:54

In Canada, similar things are happening.

16:56

Anyway, you think that after this sort

16:58

of wave of mergers and acquisitions in

17:00

two thousand and the failure. And.

17:03

that trips to the monasteries com is a

17:05

learned your lesson but it in actually work

17:07

out exactly that way. Acquisitions just

17:09

started to meet some as saying that

17:11

they did. And big companies

17:14

like Rogers. Bell Tobacco are buying

17:16

and buying properties. I did a

17:18

quick and dirty tally over the

17:20

last decade. Of balance acquisition

17:22

seen on. it's because he will start

17:25

back in two thousand and eleven with

17:27

the react was this a Ctv and

17:29

they sell out in two thousand and

17:31

six. Two. thousand and eleven

17:34

they come swinging back and

17:36

by rebuffed ah ctv canada's

17:38

largest english language television and

17:40

radio operations thirty three point

17:43

two billion dollar deal fast

17:45

forward to two thousand and

17:47

thirteen the aswell deal biggest

17:50

prize at broadcaster and the

17:52

country gets scooped up for

17:54

three point four billion two

17:56

thousand and seventeen mts is

17:59

the almost $4 billion deal in in

18:01

Veronix, 2021, $100 million deal, 2022, we

18:03

get eBox and Distribute Tell,

18:11

400 millions, those

18:13

two. So last point

18:15

on this, which is just acquisitions

18:18

and a steady slew of

18:20

them have led to this

18:23

debt. And these deals have resulted in a

18:25

consolidation of the market. It's not

18:27

just Bell though, it's Quebec or

18:29

I mean Quebec or debt levels

18:31

are way higher than BCEs about

18:34

triple and Rogers debt

18:36

levels are also triple what

18:38

BCEs already high levels are

18:41

and we see Rogers

18:43

debt levels double over the

18:45

last two years. Why? Because

18:48

it acquires Shaw in this

18:50

$26 billion deal that you

18:52

know, basically consolidates what had

18:54

previously been cable monopoly East

18:57

and cable monopoly West into

18:59

one large national communications company.

19:01

Because what we've got is

19:03

debt is just an index

19:05

of strategy and monopolization or

19:08

consolidation. And what these folks are

19:10

trying to do is to buy

19:12

themselves market share and buy off

19:15

rivals to protect existing market share.

19:17

All right, so let me try to encapsulate this

19:19

little history lesson you're giving me here following

19:22

really decades of

19:25

consolidation and concentration, the building

19:28

of media empires back

19:31

from the newspaper media empires,

19:33

which begat the cable empires

19:35

and the broadcast empires, the

19:38

powers that be looked at the internet

19:40

in a very similar way and went

19:42

on a wave of acquisition that

19:44

saw them taking on hundreds of millions of

19:46

dollars of debt. And I'm

19:48

going to guess that this all

19:51

happened during a period of

19:53

time when money was cheap.

19:55

And now that is no longer

19:57

cheap. The big bets these media

20:00

companies made need to be paid

20:02

off. And everything is

20:04

about to fall off a cliff. This

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21:17

of emerging from their winter cocoon and socializing and

21:19

it can feel wonderful, but there's also like pressure

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and I don't know, it helps to gain insight

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about yourself. Like I used to like go to

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it took years before I came to that simple

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summer camp environment, I was deprived of that

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essential one hour just to read or reflect

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or not be around other people. Like different

21:45

people have different levels of tolerance or comfort

21:47

with socializing. These are the kind of things

21:50

that you can go your whole life without

21:52

knowing if you don't talk about yourself, examine

21:54

yourself, talk with somebody else who's qualified about

21:56

yourself. As the largest online therapy provider in

21:58

the world, Better Help. can provide access

22:00

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month at betterhelp.com/Canadaland.

22:12

That's betterhelp.com/Canadaland. So,

22:18

Jesse, you're a homeowner. Are you

22:21

worried about interest? Very much so.

22:23

And I remember when we bought our home and we

22:25

took on like a half a million dollars of

22:27

debt and I think I was making $60,000 a

22:30

year and it felt

22:32

like the riskiest, stupidest

22:34

thing. But all of the

22:37

advice we were getting was,

22:39

who cares? This debt is cheap. Get

22:42

into the market. You'll have a long time to

22:44

pay this off and the interest won't be that

22:46

bad. But like a lot of

22:48

people, here I am now dealing with that

22:50

debt hasn't really diminished much over

22:52

the years and now what it costs

22:54

to carry it is

22:57

a lot more than it used to be. And

22:59

a lot of people are in that situation right

23:01

now as well. And guess

23:03

who else is in that situation? The

23:05

great big Canadian media companies. They're carrying

23:07

all this debt and the cost

23:09

of carrying it might be going up and you're like, maybe

23:12

I don't need a Netflix subscription. Maybe

23:15

I don't need a news network. Exactly. Maybe

23:17

you don't need a news network after all.

23:24

So I spoke to a guy named Steve

23:26

Hyland. He operates a website called the deepdive.ca

23:29

which does a lot of reporting on

23:31

Canadian stocks and the stock market. And

23:33

so he explained to me why suddenly

23:35

we're feeling like we're in this crisis.

23:38

Now the reason that debt is suddenly interesting

23:41

and nobody really cared about it, say five

23:43

years ago versus today, is that

23:46

we recently had a whole bunch of

23:48

inflation pop up. Central Bank started acting

23:50

and they moved interest rates up very

23:52

aggressively. The most aggressively we've pretty much

23:54

seen in our lifetime. And

23:56

then suddenly we go

23:59

from near zero interest rates with the central banks to

24:01

500 basis points and that

24:03

means that all these private companies are

24:05

now paying closer to 10% and wow

24:07

it's suddenly a big problem. But now

24:09

there's another factor to consider here and

24:12

that's the shareholders. Shareholders want to

24:14

be paid out. Highland says that the

24:17

dividend Bell pays out for example is a

24:19

cash flow that a lot of

24:21

investors like pension funds are

24:23

dependent on. It's almost

24:25

sacred in Canada. Bell is a

24:27

sacred Canadian institution. This Bell dividend

24:30

in simple terms what a company

24:32

can do with their profits. They

24:35

can reinvest those profits into growth

24:38

or they can say you know what

24:40

we're happy with our level of growth

24:42

so let's give those to the shareholders.

24:44

A lot of retirees, pension funds, they

24:46

are counting on that cash flow. They're

24:48

counting on that dividend. And if there's

24:50

no dividend well the jobs

24:53

of executives will be on the line.

24:55

So Bell's at a point though where I

24:57

think it was about $3.4 billion in dividends and that's

25:02

a pretty big number when you're trying to figure out

25:04

how to get your $36 billion in

25:06

debt down. Obviously it would just be like cut

25:09

the dividend. But if they do that it's going

25:11

to be a very

25:13

very heated decision for the board

25:15

who will probably all largely

25:17

get voted out and lose their jobs.

25:19

I know about this whole like Bell

25:21

is the most solid thing you could

25:23

possibly invest in. My wife's

25:25

I think her grandparents bought her like when she

25:28

was like 10 like here we're buying you is

25:30

like 10 stocks in Bell.

25:32

She gets these checks for like $4.

25:36

Cool. Right? Like it's like

25:38

clockwise like what sometimes it's like $1.30 or something

25:40

like Probably

25:42

cost you more to go to the bank and

25:45

deposit. Yeah the pain of the ass it's like

25:47

that Seinfeld episode. But I'm aware of this mystique

25:49

around it and I know why this becomes

25:51

this sacred thing because if that's what

25:53

they're known for as just this blue

25:56

chip stock that not only does

25:58

Bell go up but you get. paid your

26:00

dividends and you could come to rely

26:02

on it for your income post-retirement or

26:05

something, if that is the

26:08

aura and allure of Bell, a

26:10

change to that could send that stock. It's

26:13

not just about those executives losing their jobs. It could

26:15

change the way people relate to that stock and

26:17

put a run on that stock and people

26:20

could go running for some other blue chip

26:22

stock that pays more dependable dividends. So

26:24

they're going to, I get it, they're going to keep

26:27

that dividend solid no matter what's happening internally. Yeah,

26:29

exactly. But they want to keep that

26:31

reputation of being the Canadian stock to

26:33

buy. When you look at companies like

26:35

Bell and Rogers and when you look

26:37

at how they communicate to their investors

26:39

in reports and earnings calls, it's this

26:41

rosy picture of financial growth. They

26:44

talk about increasing dividends each year,

26:46

what a sure bet they are

26:49

for a smart investor. This

26:51

is Mirko Bibbick, CEO of Bell

26:53

Canada, in BCE's most recent earnings

26:55

call. We're increasing the BCE common share

26:57

dividend by 3.1% for 2024. It's

27:02

our 16th year of uninterrupted

27:05

growth, demonstrating our unwavering commitment

27:07

to dividend growth. Dividend

27:10

growth remains central to our value proposition

27:12

and we'll continue to prioritize it

27:15

in our capital allocation. And

27:17

even though Bibbick talks about how they've lost $40 million

27:20

a year on news, the company

27:22

is actually still making money. In

27:26

2023 BCE raked in

27:28

over $2 billion in net

27:30

earnings from $24 billion

27:33

in revenue because things

27:35

like internet and phones are

27:37

still profitable. But it's

27:39

all about growth and keeping this growth up

27:41

while they can continue to pay down their

27:44

debt and make sure the company

27:46

is attracted to investors. So

27:48

they need to balance out the books. Well

27:51

what's a little corporation to do? They

27:53

start to slash and burn. Dwayne

27:56

Winstik explained what this means. is

28:00

that you basically now have massive

28:02

amounts of debt that you have to

28:04

pay back. And so

28:06

when you're a telecoms company and

28:09

your mobile wireless operations or your internet

28:11

access operations are spinning off profits in

28:14

the high 30%, 40% range, that means

28:16

that your

28:20

media operations are expected to perform

28:22

somewhere close to that. So the

28:24

slash and burn approach says, look,

28:27

what we're going to do to drive profits up

28:30

at these units that like the

28:32

Bell Media unit, for example, to

28:35

comparable levels to the much more

28:37

profitable mobile wireless side and the

28:39

internet access operations, we're going to

28:42

slash and burn, we're going to

28:44

cut back on our investment in

28:47

programming, in news, in the number

28:49

of journalists that we employ, and

28:51

so forth. And it's

28:54

basically a way of retrenching

28:57

and of trying to make

28:59

the finances work. The

29:02

funny thing about slash and burn is they're just

29:04

reversing what they did initially. Exactly. They

29:06

picked up these little pieces and said it's going

29:08

to be stronger if it all forms a big

29:10

Voltron and it's part of this large company. And

29:13

then they're like, actually, let's just sell off these

29:15

little pieces. Usually after they've like cut them internally,

29:17

and they've stopped making as much money as they

29:19

used to, then they dump them for

29:21

like, often a fraction of what they paid and

29:23

leaving them in terrible shape. So part of slash

29:26

and burn is gutting the things that are making

29:28

less money. That means layoffs, the

29:30

same layoffs we're seeing now fit exactly into

29:32

this sort of slash and burn approach. So

29:35

remember those Bell jobs that got cut a few

29:37

weeks ago? Well, I asked Steve Hyland

29:39

if he thinks they could have been saved. What's

29:41

going to happen if they cut that dividend and

29:44

keep those employees? Well, the shareholders are

29:46

going to have a vote. They're going to fire the

29:48

entire board and they're going to

29:50

put in a board that's just going to keep

29:52

that dividend going. That's how capitalism works. But Shareese

29:54

news, news is

29:56

no longer profitable. I'm pretty sure

29:58

that most legacy news is losing

30:01

money, right? Well, yes, that might be true. But

30:04

here's our expectation of profits and the reality

30:06

need to be looked at. And

30:08

once I talk about the idea that

30:11

news has always been supported by outside

30:13

sources. There's a long hidden

30:15

truth in the economics

30:17

of journalism, which

30:19

is that nobody has

30:22

ever paid the full price

30:24

of news, of a general news

30:26

service. It's always been subsidized by one

30:29

of three things or a combination of three, advertising,

30:33

which in Canada ruled from the 1930s up

30:35

until about 2005. Wealthy

30:40

patrons. We heard of Conrad

30:42

Black coming in in the 1990s

30:45

and buying up Southern papers and

30:47

launching the National Post as part

30:49

of an ideological project. Well, wealthy

30:51

patrons will basically flip

30:54

the bill for an ideological project.

30:56

And then there is, of course,

30:58

governments. I'm aware of that

31:00

being true in broadcast that

31:03

the larger business for broadcasters

31:05

of owning a TV station

31:07

was incredibly profitable. But

31:10

in order to do that, they had to

31:12

be granted a piece of public property or

31:14

airwaves. No, the deal they

31:16

made with the public via the CRTC

31:18

was, all right, we're going to make

31:20

a ton of money off of I Love Lucy and American Network

31:22

TV. But

31:24

in exchange for this license, which is really a license to

31:27

print money, we're going to do news. And yeah, we'll try

31:29

to make a buck off of it. But if we lose

31:31

money off of it, that's okay. We're making so much money

31:33

off of all this other stuff that this is giving back.

31:36

And it's got a bit of a brand lift

31:38

because it gives us sort of a local Canadian

31:40

presence that we're keeping you informed

31:43

and we're building up our local personalities. That

31:45

was the traditional deal that made

31:47

news, I guess, a loss leader, but a

31:49

loss leader in a very profitable enterprise. Yeah,

31:53

and that's actually how Heritage Minister Pascal

31:55

St. Orange described it in February when

31:57

she reacted to the layoffs. disappointed

32:00

in Bell Canada's decision for many

32:02

reasons. One of them is because

32:05

in the past decade when acquisition

32:07

were allowed for those big companies

32:09

to acquire television station or radio

32:11

station, it came with the promise

32:14

that they would deliver on news content. Also

32:17

the CRTC, because they are

32:19

facing difficulties, alleviated

32:21

them of the burden of $40

32:23

million per year to help them

32:26

keep their promise of producing news. And

32:28

again, they're backing away from that. So

32:31

that deal seems to be broken

32:33

now. All of this dumps us out into

32:35

this crisis that we have right now. Where

32:38

does this leave us? Are we still in the

32:40

slash and burn era or can we like kind

32:42

of move on to figuring out how to rebuild

32:44

something new? That's a great question, Jesse. That

32:46

takes us exactly to where we are now. This

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Canada land. Have

34:02

you ever seen the

34:04

early 2000s sitcom, Reba?

34:14

No. You've never seen it. It stars

34:16

Reba McIntyre. Freeze! Let

34:19

me! No,

34:23

the fridge is broken. I'm talking to

34:26

the peas. My mom used to

34:28

watch it and... So you have seen it. I mean, I've

34:30

seen my mom watching it and then I walk to a

34:32

different room to watch something

34:35

different. Lies, all lies. I

34:37

know you secretly indulge in Reba. The

34:39

reason I'm asking is because Steve Hyland actually says

34:42

that you better get ready

34:44

because TV is about to be all Reba

34:46

all the time. What on earth are you

34:48

talking about? My theory on what will happen

34:51

to Bell is they're

34:53

going to package off whatever they can

34:55

in Bell media to private equity. It's

34:57

going to do a mathematical exercise of

34:59

how do we just turn on

35:01

the Reba machine or whatever

35:03

those different sitcoms or Gilmore Girls

35:06

or whatever and hope that there's going to

35:08

be people that are in their 60s, 70s

35:10

and 80s that keep paying for the cable

35:12

because they've had it their entire lives. That's

35:14

what they know. Good morning, Mom! That's

35:16

great. Daddy, your first win! Yeah! How

35:19

bad was the other team?

35:23

They didn't show up. So hours and

35:25

hours of the TV show Reba. Or

35:28

similar. On the flip side, Dwayne

35:30

Wintzeck predicts that news actually isn't totally

35:33

done for. He

35:35

thinks it'll become more niche, either that or it

35:38

all comes crashing down. Well, there's not

35:40

a viable business model for the

35:42

news. There never has been and there never will be. For

35:44

specialized kinds of news like this, you will have

35:46

a payback. For

35:48

specialized kinds of news like this, you

35:51

will have a paying audience and they

35:53

will be able to pick up enough

35:55

of the bills so that in combination

35:57

with subscribers picking up

36:00

the big chair of the bill, maybe

36:02

a modicum of advertising, picking up another,

36:04

you know, decent sized chunk, and

36:07

then wealthy patrons for

36:09

some kind of public subsidies, you

36:12

can cobble it together and make the

36:14

logic, the athletic, and I

36:16

would say Canada land work. Right?

36:18

But if you talk about a

36:20

general news service, like, you know,

36:22

the former network news, they're gone.

36:25

And unless we decide that through

36:27

public policy, regulatory measures,

36:29

public funding, to try

36:32

to do something about this, there's no cure

36:34

inside. So what do you think is going to happen,

36:36

Jesse? I think that there is

36:38

an interesting conversation that is happening, but

36:40

I think Canada is getting it wrong

36:43

in terms of looking

36:45

at the traditional deal we have with these telecom giants and

36:47

saying, what do you owe the public? Somehow

36:49

they are weaseling their way

36:51

out of any news obligation. Their

36:54

entire conception of

36:56

where the news media is at and where

36:59

it might go and what is possible and

37:01

ultimately how terrible everything is and

37:03

how hopeless it is, it was

37:06

all based on a concept that

37:08

the only way media can work is

37:11

at mass media scale. But

37:13

that does not mean that

37:15

there is not a future for

37:17

news media. Maybe

37:20

it's time for us to give

37:23

up the concept that

37:25

media can build corporate empires. That's

37:31

your Canada land. I hope you liked it. I

37:34

think that's another episode that is something that you're

37:36

just not going to hear anywhere else. And

37:39

I think we need to be talking about this stuff and we need to be doing journalism

37:41

on these things. And the only way we can

37:43

do that is because we have supporters. If

37:45

you agree with any of that, if you

37:47

value the show, please support us. We rely

37:50

on your support to pay for our journalism,

37:52

to keep the lights on here. And

37:54

when you become a supporter, you will

37:56

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38:04

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38:07

the reason why people support us,

38:09

thousands of them, is to do

38:11

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38:13

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38:17

Come and join us now. Be a part

38:19

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38:21

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38:25

You can email me at jesse at

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You can sign up for our newsletter.

38:34

Today's episode was reported by Cherise

38:36

Sucharin. Our senior producer is Bruce

38:38

Thorson. Audio production and editing today

38:41

from Caleb Thompson. Our

38:43

production coordinator is Andre Proulx. Our

38:45

editor-in-chief is Karen Puglaze. I'm

38:48

your host, Jesse Brown. Our theme

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38:55

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