As Canada's newsrooms shrink, concerns over coverage grow

TORONTO (Reuters) - Canadian newsrooms are shrinking in increasing numbers as an oil shock rocks the economy and curtails the appetite of advertisers already distracted by digital outlets.

The media retreat is touching small-city newspapers thousands of kilometers apart and television stations tucked into larger telecom companies that struggle to turn a profit.

Last month, the Black Press’ [BLKPRP.UL] Nanaimo Daily News closed and Torstar’s Guelph Mercury stopped publishing a broadsheet edition, keeping its website going with content from other outlets.

Those cuts came just as the country’s biggest chain, Postmedia Network Canada Corp, fired 90 journalists and merged its tabloid and broadsheet newsrooms in four major cities, including the capital Ottawa.

The moves from the indebted publisher came less than a year after the competition watchdog approved its purchase of the Sun tabloid chain and have led to accusations it has broken a promise to retain each paper as a distinct operation.

“The promise was that they weren’t going to do this,” said Brian Masse, a New Democratic Party parliamentarian said ahead of a hearing on Tuesday that will examine how Canadians are informed by the media, the erosion of local news reporting and the consequences of news media concentration.

A Postmedia spokeswoman did not respond to requests for comment. The Competition Bureau said it had not sought assurances the publisher would not fire journalists or close newspapers.

The sharp reduction in the size of Canada’s press corps also has some questioning the media’s ability to investigate and report on corporate malfeasance and political chicanery.

Mélanie Joly, the Canadian heritage minister, said via a spokesman that “journalism plays a central role in a healthy democracy” and that she plans consultations on how a shift to digital is impacting Canada’s creative, media and production sectors.

The heritage committee plans at least 10 meetings to hear from experts and pull together recommendations.

“What we’re concerned about, as an industry and I think as a society, is the loss of public interest journalism,” said John Hinds, head of Newspapers Canada, an industry group representing publishers.

Hinds wants the government to retake its role as the industry’s largest advertiser, spending that was cut under the previous Conservative government, and create tax incentives for local coverage.

Print advertising revenues held up better in Canada versus the United States in the aftermath of the 2007-2008 financial crisis but are now sinking faster, according to data from Newspapers Canada.

U.S. print revenues slumped 40 percent between 2007 and 2009, compared with 21 percent in Canada. But in the last two years, Canada is down 31 percent while U.S. sales eased 13 percent.

Concentration in Canada is roughly double that in the United States, according to Dwayne Winseck, a Carleton University professor and director of the Canadian Media Concentration Research Project.

“What sets Canada out as an outlier is the extent of vertical integration,” he said. “The companies that own the pipes also own the content providers whose messages are flowing over those pipes.”

The Canadian Radio-television and Telecommunications Commission last week took a swipe at such companies - including BCE Inc and Rogers Communications, both of which have cut hundreds of media jobs recently - saying they must invest in robust news operations or be held accountable ahead of license renewals due next year.

A major media union wants even more forceful action, calling for Postmedia’s breakup and tougher rules against concentration and the type of leveraged buyout that helped Postmedia gain control of roughly one-third of Canada’s English-language daily newspapers.

“I’m absolutely stunned it’s legal, it shouldn’t be,” said Martin O’Hanlon, president of CWA Canada, which represents roughly 6,000 print, digital and broadcast media workers, including at Thomson Reuters. “And we’re going to be pushing the government with all our might on that front.”

(This story corrects to show Mélanie Joly is heritage minister, not the minister’s spokeswoman, in paragraph nine)

Reporting by Morgan Sharp; Editing by Alan Crosby