Bell Media Bill C-18 Page 1 of 10 SENATE OF CANADA STANDING COMMITTEE ON TRANSPORT AND COMMUNICATIONS BILL C-18,

AN ACT RESPECTING ONLINE COMMUNICATIONS PLATFORMS THAT MAKE NEWS CONTENT AVAILABLE TO PERSONS IN CANADA COMMENTS OF BELL MEDIA 26 MAY 2023

Bell Media Bill C-18 Page 2 of 10 Table of Contents Page 1.0 INTRODUCTION ................................ ................................ ................................ ............. 3 2.0 LOCAL NEWS HAVE A CENTRAL ROLE IN CANADIAN SOCIETY AND DEMOCRACY ................................ ................................ ................................ ................. 4 3.0 LOCAL NEWS IS EXPERIENCING MOUNTING FINANCIAL DIFFICULTIES ................. 5 4.0 BROADCASTERS HAVE ADAPTED BY CREATING DIGITAL NEWS OUTLETS, BUT THIS IS NOT ENOUGH TO ENSURE FINANCIAL STABILITY ................................ ....... 6 5.0 BELL MEDIA SUPPORTS BILL C-18 AND ITS COMPENSATION REGIME ................... 8 6.0 CANADIANS SUPPORT THE GOVERNMENT ENCOURAGING DNIS TO NEGOTATE WITH CANADIAN NEWS ORGANIZATIONS FOR FAIR PAYMENT OF THEIR WORK . 8 7.0 DNIS SHOULD NOT BE ABLE TO INFLUENCE WHAT NEWS CANADIANS CONSUME ................................ ................................ ................................ ...................... 9

Bell Media Bill C-18 Page 3 of 10 1.0 INTRODUCTION 1. Bell Media is pleased to submit the following comments concerning Bill C -18,

An Act respecting online communications platforms that make news content available to persons in Canada. We are Canada's leading television and radio provider in both English and French Canada. As a result, Bill C-18 has the potential to have a significant impact on our business and the environment in which we operate. 2. Canadians turn to national and local news organizations as trusted sources of news and information, however, the financial challenges they face are massive. These financial challenges ultimately disadvantage the Canadian public.

As news broadcasters and publishers struggle to maintain the resources necessary to continue to inform Canadians, Canadian news organizations have had to make difficult decisions to cut staff, limit coverage or close altogether, and unfortunately, local news has been negatively impacted. 3. While Canadian news organizations continue to make valuable contributions to the public good despite financial difficulties, digital news intermediaries (DNIs), like Facebook and Google, are extracting the profits from their contributions.

The Canadian federal government has responded with Bill C -18, which includes a bargaining regime to compensate news businesses for their news content when it is shared by DNIs. Bell Media is suppo rtive of Bill C -18 and the compensation regime, which would help to fund quality Canadian journalism and address the bargaining imbalance between news publishers and the large digital platforms that use news content.

Section 51 of the Bill is critical to ensure that DNIs do not use their significant leverage to discriminate between eligible news businesses (ENBs). As such, we are pleased that the House of Commons approved an amendment proposed by the Standing Committee on Canadian Heritage that closes off a significant loophole which would have allowed DNIs to unjustly discriminate against eligible news businesses by simply not making them available on their platforms. In other words, DNIs would have been able to circumvent the purpose of this provision by blocking access altogether. This is clearly not the intent of this section; as such, we are fully supportive of this amendment.

Bell Media Bill C-18 Page 4 of 10 2.0 LOCAL NEWS HAVE A CENTRAL ROLE IN CANADIAN SOCIETY AND DEMOCRACY 5. All publishers of news perform a significant role in each community that they serve. Local news organizations in particular have "boots on the ground" and are integral to the communities they serve. They reflect the interests and concerns of local communities though coverage of local politics and events, and local perspectives on national and international news. Foreign news organizations do not and cannot match the value that Canadian local news coverage delivers to Canadians.

Consequentially, local news and journalism are critical to ensuring that we have an informed citizenry, which is foundational to Canadian society, democracy and sovereignty. Any diminishment of the essential component local news plays in our society ultimately harms Canada and its citizens. 6. Surveys strongly demonstrate the importance that Canadians place on local news.

In 2014, as part of the findings of a public opinion survey commissioned by the CRTC, news programming was considered the most important type of television programming to Canadians, with 81% saying local news is import ant.1 The importance of local news transcended all demographic groups, with 78% of Canadians aged 18 to 34 also considering local news to be the most important.

A more recent survey from Solutions Research Group in 2021 demonstrated that television is the source most often mentioned for local news by respondents (76%). 2 As well, a 2022 survey from Nanos stated that 9 in 10 Canadians say being able to access local, regional, national and international news from Canadian sources is important or somewhat importa nt to them.3 7. While local news is always important, it becomes vital during local emergencies and crises. During these periods, news from Canadian broadcasters is a critical lifeline to local communities across the country.

The COVID-19 health crisis provided a timely reminder of what Canadians do in such a difficult period and whom they go to for credible, reliable information. 8. Bell Media is one of the largest publishers of broadcast local news in Canada, proudly operating 35 local television stations (branded as CTV, CTV Two and Noovo), each of which provides local news to the communities we serve.

We are present in markets of all sizes, including 1 Let's Talk TV: Quantitative Research Report, Harris/Decima, 24 April 2014. 2 Canadian Consumers and Radio: Lessons from COVID-19, Solutions Research Group, February 2021, page 13. 3 National Survey conducted by Nanos for the Canadian Association of Broadcasters , November 2022 https://www.cab-acr.ca/majority-of-canadians-believe-web-giants-should-support-canadian-journalism-say-they- trust-news-from-canadian-sources-nanos-poll/.

Bell Media Bill C-18 Page 5 of 10 14 markets where we are the only local television news voice. It is our local television news that forms the backbone of our national news services, as the news content and stories gathered and produced by our local stations is often shown nationally. We are also licensed to operate 109 radio stations throughout 58 markets across Canada, including eight legacy AM news talk radio stations. 9. The health of broadcast news and journalism are intrinsically linked to the financial health of local stations, whose profits (or lack thereof) support the production of local news.

The survival of many local te levision stations throughout Canada is at significant risk and unfortunately, the health of the radio sector is now showing significant strain as well. 3.0 LOCAL NEWS IS EXPERIENCING MOUNTING FINANCIAL DIFFICULTIES 10. It is widely recognized that private local television is in structural decline, initiated first by audience fragmentation caused by discretionary television services and now exacerbated by competition from foreign online services.

Over the last five years, private TV and radio stations have exper ienced revenue decreases of $1.26B. 4 In fact, local television is buckling under extreme financial pressure with the sector being unprofitable since 2012. The private radio industry has also been negatively impacted by the increasing popularity of online audio services. Indeed, the radio sector has experienced seven consecutive years of revenue decline, declining half a billion dollars, from $1.9 billion in 2014 to $1.4 billion in 2021.5 11.

Increasingly, advertising dollars are migrating away from Canadian news organizations to foreign digital platforms. The concentration of online advertising has resulted in 80% of advertising revenues going to a small number of digital platforms, mostly Facebook and Google. This shift in the advertising market has had a devastating impact on local news.

As noted above, local television has been unprofitable since 2012 with PBIT declining to -18.6% in 2020 and - 12.4% in 2020.6 70% of private local television stations and 40% of private radio stations entered 2020 with a negative PBIT.7 Moreover, in 2018, 90% of our stations had a negative PBIT and while this "improved" to only 84% having a negative PBIT in 2019, this figure increased to 94% in 4 CRTC Broadcasting Sector Communications Market Reports (CMR), 2022 August.

Note that this CMR provides the most recent aggregated industry data available. 5 CRTC Broadcasting Sector Communications Market Reports, 2022 August. 6 CRTC Broadcasting Sector Communications Market Reports, 2022 August. 7 Communications Management Inc., The crisis in Canadian media and the future of local broadcasting , 24 August 2020 (available at https://www.cab-acr.ca/resources/cmi-report/).

Bell Media Bill C-18 Page 6 of 10 2020. More specifically, as of 2022, Bell Media's local television stations have reported an aggregate loss of $583.7M since 2012.8 The economic erosion of the industry has been further exacerbated by the COVID-19 pandemic. 12. In addition, we have been losing tens of millions alone in the production and delivery of local news. 9 More specifically, in the four -year period between 2016 and 2019, the average annual news operating loss was $28.4M.

In 2020 and 2021, due to advertising revenue declines attributable to the COVID -19 pandemic, this jumped to an average operating loss of $51 .2M (despite the sharp increase in viewership as detailed further below). In 2022, despite advertising revenue recoveries, the operating loss was $32.3M. Without a doubt, delivering local news is a very costly undertaking. 13. The precarious financial position of our local television stations has meant that we have had to make difficult decisions and, unfortunately, local news has been negatively impacted.

We are no longer able to keep full -time journalists at city halls and co urts across our country, for example. We are missing stories on a daily basis and, as a result, our role in holding governments, big business and others accountable has diminished. 4.0 BROADCASTERS HAVE ADAPTED BY CREATING DIGITAL NEWS OUTLETS, BUT THIS IS NOT ENOUGH TO ENSURE FINANCIAL STABILITY 14. Broadcasters have taken note of the shift to digital news consumption, and have responded to consumer demand by creating news websites.

Traditional broadcasters have become the most popular sources to access news content online with tens of millions of Canadians visiting news sites operated by Canadian broadcasters per month. Moreover, Canadian broadcasters attract 35% of the online news audience (more than any other category of news providers online) as shown below:10 8 Aggregate Annual Returns at https://crtc.gc.ca/eng/industr/ann.htm. 9 CRTC Annual Returns (Form 1231). 10 Comscore Media Trend (News/Information), 2022.

Bell Media Bill C-18 Page 7 of 10 15. Regardless of the platform, Canadians turn to broadcasters as their primary sources for news programming. More than 15 million Canadians per month visit local news sites operated by each of CTV News and CBC News.11 In 2022, total visits to the CTV News sites totaled more than 1 billion, with more than 552 million for our local news visits.12 16. Unlike traditional broadcasting, broadcasters cannot control the end-to-end distribution of news content.

Search companies and social media companies have become intermediaries in that process and have profited significantly from it through increased user interest and digital advertising revenues. Of concern, is how those visitors searched for and/or found broadcasters' news website. Despite significant efforts to promote sites and encourage direct access, many Internet users and Canadian news consumers are re-directed to news sites from other sources.

For CTV News sites, our internal data shows that 42% of users come to our sites from search sites (predominantly Google) and 23% from social media sites (predominantly Facebook). Only 15% of users come directly to our news sites through bookmarks or manually typing in the URL addresses of our sites.13 17. The key point is that while broadcasters have put their news online, the online advertising they obtain from displaying that news does not justify the expense of funding operations.

As a result, the broadcasting industry is faced with reducing its investm ent in news production as 11 Comscore Media Trend (News/Information), March to December 2022. 12 Adobe Analytics, 2022, Proprietary Data to Bell Media. 13 Adobe Analytics, 2022, Proprietary Data to Bell Media. 35% 24% 22% 7% 13% Canadian broadcasters (CTV, CBC, Global) Foreign broadcasters (CNN, BBC) Canadian Print (Postmedia, Globe and Mail, Toronto Star) Foreign Print (NY Times) Digital Only News (Huffington Post, Vice, Daily Hive, etc.) Audience Share of Leading Digital News Websites

Bell Media Bill C-18 Page 8 of 10 traditional revenues decrease and online advertising revenues fail to make up that gap. Yet, at the same time, the online advertising revenue for digital services like Google and Facebook, continues to grow every year. What is c lear is that Google's and Facebook's revenues have grown in part from exploiting Canadian news content creators' online news stories, but the creators themselves are not able to fully monetize this benefit.

Bill C -18's compensation regime addresses this issue and helps to ensure DNIs help fund the creation of this news content. 5.0 BELL MEDIA SUPPORTS BILL C-18 AND ITS COMPENSATION REGIME 18. Access to quality journalism has never been more important. While the spread of misinformation and disinformation surge s, and the public becomes increasingly mistrusting, Bill C-18 will ensure Canadians have access to quality, fact -based news at the local and national levels.

We are supportive of a regime in which the DNIs that provide news stories to the users of their platforms are required to financially contribute to the production of news. 19. The compensation regime distributes compensation taking into account news audiences and the costs of news production. These digital platforms are growing their revenue at the expense of Canadian broadcasters while at the same time profiting from the content they create through local news infrastructure.

Without the news content provided by local journalists, these platforms would have significantly less content to provide and woul d be considerably less appealing to their users. 20. Bill C-18 clearly recognizes the threats facing Canadian news businesses, as it requires DNIs, like Google and Facebook, to provide compensation for links. The influx of funding from designated digital platforms would help mitigate the ongoing financial losses of Canadian news businesses.

While this new funding source would help support Canadian online news production at existing levels, the direct benefit is halting the decline in news production across all Canadian online publishers. 6.0 CANADIANS SUPPORT THE GOVERNMENT ENCOURAGING DNIS TO NEGOTATE WITH CANADIAN NEWS ORGANIZATIONS FOR FAIR PAYMENT OF THEIR WORK 21. A recent study from Nanos indicates that 82% of Canadians are not confident that Google works in the best interests of Canadians, and 91% of Canadians are not confident that Facebook

Bell Media Bill C-18 Page 9 of 10 works in the best interests of Canadians.14 The same study indicated that a majority of Canadians support the Government of Canada encouraging Google and Facebook to neg otiate with Canadian news organizations for the fair payment of their work.

Canadians are over six times more likely to support or somewhat support having the Government of Canada encourage Google and Facebook to negotiate with Canadian news organizations for the fair payment reflecting the value of their work rather than Google and Facebook paying nothing to Canadian news organizations for the value of their news content. 7.0 DNIS SHOULD NOT BE ABLE TO INFLUENCE WHAT NEWS CANADIANS CONSUME 22. DNIs can dictate what news Canadian users see by boosting or deprioritizing news content, or refusing to carry certain news content.

DNIs should not have the power to decide what news content is of value to Canadians and what news content Canadians see. The DNIs' incentive structures are simply to attract user attention, increase engagement and sell advertising, and not to provide quality news and information to Canadians. 23.

Furthermore, Facebook and Google's threats to pull their services from Australia in the face of the News Media Bargaining Code, and Facebook’s subsequent blocking of news that led to essential information services related to health and emergencies being blocked, is further evidence that their incentives do not align with the best interests of news co nsumers.

In fact, Facebook has threatened that Bill C-18, if enacted, will result in them pulling news from Canada.15 Google has warned that Google Search could "break" 16 and they recently confirmed that they blocked news to 1.1 million Canadians in an apparent test run for a permanent block of news to all Canadians should Bill C -18 become law. 17 18 This is not the behaviour of organizations that should be deciding what news and information Canadians value, and prioritizing what they see. 14 National Survey conducted by Nanos for the Canadian Associati on of Broadcasters , November 2022 : https://www.cab-acr.ca/majority-of-canadians-believe-web-giants-should-support-canadian-journalism-say-they- trust-news-from-canadian-sources-nanos-poll/. 15 https://www.theglobeandmail.com/politics/article-meta-would-end-canadians-ability-to-view-and-share-news- under-bill-c/. 16 https://www.theglobeandmail.com/politics/article-google-warns-ottawas-online-news-act-would-break-its-search- engine/. 17 https://nationalpost.com/news/politics/google-blocking-news-content-for-some-canadians-in-response-to- government-bill. 18 Google Testimony, Meeting No. 75 CHPC – Standing Committee on Canadian Heritage, 20 April 2023.

Bell Media Bill C-18 Page 10 of 10 24. We would like to thank the Standing Committee for the opportunity to submit these written comments. *** End of Document ***