ATINER CONFERENCE PAPER SERIES No: LNG2014-1176 Athens Institute for Education and Research ATINER ATINER's Conference Paper Series MED2017-2197 Financialization of Canadian Media Marc Edge Associate Professor Department of Media and Communications University of Malta Malta & Professor of Media and Communication University Canada West Vancouver, British Columbia Canada 1 ATINER CONFERENCE PAPER SERIES No: MED2017-2197 An Introduction to ATINER's Conference Paper Series ATINER started to publish this conference papers series in 2012. It includes only the papers submitted for publication after they were presented at one of the conferences organized by our Institute every year. This paper has been peer reviewed by at least two academic members of ATINER. Dr. Gregory T. Papanikos President Athens Institute for Education and Research This paper should be cited as follows: Edge, M. (2017). "Financialization of Canadian Media", Athens: ATINER'S Conference Paper Series, No: MED2017-2197. Athens Institute for Education and Research 8 Valaoritou Street, Kolonaki, 10671 Athens, Greece Tel: + 30 210 3634210 Fax: + 30 210 3634209 Email: [email protected] URL: www.atiner.gr URL Conference Papers Series: www.atiner.gr/papers.htm Printed in Athens, Greece by the Athens Institute for Education and Research. All rights reserved. Reproduction is allowed for non-commercial purposes if the source is fully acknowledged. ISSN: 2241-2891 18/05/2017 2 ATINER CONFERENCE PAPER SERIES No: MED2017-2197 Financialization of Canadian Media Marc Edge Associate Professor Department of Media and Communications University of Malta Malta & Professor of Media and Communication University Canada West Vancouver, British Columbia Canada Abstract Canada, since the 1980s, has exhibited among the highest levels of media ownership concentration in the world. This has been the subject of numerous federal inquiries, including a Royal Commission on Newspapers in 1980-81. Concentration went to another level in 2000 when convergence saw the country’s private television networks partner with major newspaper companies. Most of these arrangements did not survive the decade, dissolving either through bankruptcy or voluntarily. The global financial crisis of 2008-09 saw the country’s largest news media company, Canwest Global Communications, declare bankruptcy. Its newspaper and television divisions were sold to separate owners, with the newspapers being bought by a consortium of its creditors called Postmedia Network led by several US hedge funds. This contravened Canada’s 25-percent limit on foreign ownership of print media, but a two-tiered share structure that kept foreign voting control below the limit was allowed by the federal government. In 2014, Postmedia bought Sun Media, the country’s second-largest newspaper chain. The purchase was approved by the federal Competition Bureau despite the monopoly on English-language daily newspaper publishing it gave Postmedia in most major Canadian cities. Following that approval, and despite its promises to maintain competition in cities where it owned two dailies, Postmedia combined the newsrooms of its newspapers in those cities. This resulted in yet another federal inquiry, which began in early 2016. The situation in Canadian media can be seen as a result of financialization, which began in 1945 with a listing for the public sale of shares in the predecessor company of Postmedia. This allowed for it to be the victim of a hostile takeover in the 1990s and to eventually fall into ownership by hedge funds. A lack of limits on media ownership and weak enforcement of competition laws and foreign ownership limits has assisted this financialization. Keywords: Canadian media, concentration of media ownership, convergence, financialzation, mergers and takeovers 3 ATINER CONFERENCE PAPER SERIES No: MED2017-2197 Introduction Decades before the concept of financialization emerged, media industries in Canada began exhibiting under "continentalization" with the United States the symptoms that would later transform the world economy under globalization. As a result, media in Canada are among the mostly highly concentrated in ownership after suffering a disastrous experiment with convergence at the millennium, and despite supposed limits on foreign ownership their remains are now being picked over by US "vulture capitalists". Canadian media thus serve as something of a "canary in the coal mine" for media in other countries now undergoing the same process. Proximity to the United States allowed the first radio waves and then television broadcasts to cross the Canadian border unimpeded, prompting the federal government to enact some stringent media regulations. The content requirements of its own broadcasters were designed to protect the country’s culture from being overwhelmed by American fare. Canadian broadcasters had to carry a certain percentage of home-grown programming in order to encourage the development of Canadian artists. Ownership restrictions were also put in place, as foreigners were limited to a minority position in the ownership of Canadian media. The proliferation of American magazines distributed in Canada led to a requirement that publishers have a certain percentage of Canadian content for their advertisers to qualify for a tax deduction of the expense. The form of regulation adopted, however, was a "back-door" strategy, however, and it ultimately failed to prevent foreign domination due to the ingenuity of media investors. Thus the depredations of high finance wreaked havoc on Canadian media. Financialization arose first on a wave of deregulation in the 1980s brought by the Reagan presidency in the US, and then took off on the back of globalization brought in the 1990s by advances in communication technology – first satellite transmission and then the Internet. Aided by deregulation and globalization, financiers came to excel at extracting value out of enterprises in the phenomenon that came to be called financialization. Their manipulations would crash the world economy in 2008, but that hardly deterred the vulture capitalists, who picked up the pieces at bargain prices to begin the cycle again. Included were some of the biggest newspaper companies in North America, including the largest in Canada, and then the next-largest. Financialization was the name given to the doubling of the US financial sector starting in the 1980s at the same time that its manufacturing output was halved due to globalization. Epstein (2005: 3) defined it in his 2005 book Financialization and the World Economy as "the ascendancy of "shareholder value" as a mode of corporate governance". According to Palley, financialization was a process whereby "markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes" (Palley 2007: 2). Its principal impacts, he noted, were to: 1. elevate the significance of the financial sector relative to the real sector, 4 ATINER CONFERENCE PAPER SERIES No: MED2017-2197 2. transfer income from the real sector to the financial sector, and 3. increase income inequality and contribute to wage stagnation (Palley 2007: 2). According to Foroohar in her 2016 book Makers and Takers, financialization is an "economic illness" which has led to both to income inequality and declining investment in needed research and development in favor of quarterly dividends and stock buybacks to enrich investors (Foroohar 2016: 5). "Financialization is undermining our economic growth, our social stability, and even our democracy" (Foroohar 2016: 7). The rise of finance has "led to the fall of American business", according to Foroohar (2016: 8) because it has "come to rule – rather than fuel – the real economy". Along with neoliberalism and globalization, financialization transformed world economy starting in the 1980s. It especially transformed media industries, which became highly financialized. In her 2010 book Journalism in Crisis: Corporate Media and Financialization, Almiron (2010: 159) characterized financialization as "the primacy of financial over industrial logics". In a "truly alarming" development, she noted, "finance capital has become the real owner of the world’s top news-media firms" (Almiron 2010: 154). This has come at a cost not just for their journalism but for their very raison d'être. "Media corporatization first and later their financalization have constituted a scenario that turns journalistic autonomy into an illusion", she noted. "Financialized multimedia communication groups are today more of a market power – with multimedia influences and convergent interests with financial groups – than guardians of liberty, creators of consensus, egalitarian democratizers, or subverters of the structures of authority" (Almiron 2010: 174, 175-176). The journalism of financialized news media companies tended to act not as a check and balance on corporate power, she added, but instead acted on behalf of the financial elite and shied away from reporting on its financial engineering. The economic house of cards built by the financial system based on the culture of greed, as so many times before in history, would have a far less chance of progressing in modern societies if journalism hadn’t failed in its role. This failure was encouraged by the progressive deregulation of the media – that is, by approving rules designed to benefit the consolidation and growth of giant corporate owners rather than public service (Almiron 2010: 166). This paper utilizes the historical analysis to explore