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Why are taxpayers subsidizing private media via the CBC?

Yahoo Inc. is making its shareholders yell Yahoo! again after its share price broke through its 52-week high a few days ago. One of its competitors, the Huffington Post, which is owned by AOL Inc., says its traffic continues to increase. Tech giant Microsoft may be going through an existential crisis, but it's still handily earning billions of dollars a year.

So you'd think they'd all get together and at least send Canadian taxpayers a thank-you card.

That's because we're subsidizing each of those firms, through licensing deals struck by the Canadian Broadcasting Corp. to sell its content to websites that include,, and At a time when all of the major legacy Canadian publishers – including the Toronto Star, Postmedia Network Inc., the Sun Media chain, and, yes, The Globe and Mail – are rushing to erect paywalls around content, the CBC activity tilts the playing field, making it even more difficult to survive.

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The CBC has been rushing in the past few years to distribute its content on as many platforms and channels as it can. Increasingly, that's led to criticism about so-called "mission creep."

Last year, when the Corp. launched its CBC Music service, offering more than three dozen free online music streams, for-profit competitors who are trying to charge for similar services cried foul. They insisted the CBC was going too far beyond its mandate, outlined in the Broadcasting Act, to "provide radio and television services incorporating a wide range of programming that informs, enlightens, and entertains." In the end, the Canadian broadcast regulator dismissed the competitors' complaints.

Still, it's not the first time for-profit companies have told the CBC not to tread on their turf: years ago, private broadcasters complained that CBC Newsnet (née Newsworld) stretched the Corp.'s mandate too far, making it difficult for them to provide their own 24-hour TV news services. In time, they all got into the game, and found their own audiences.

But there's a difference between expanding onto new platforms such as cable TV and online music to deliver content to audiences where they want it, and offering that content on channels that belong to others and therefore help private businesses.

The CBC has an impressive online news service that is fed by a mammoth machine. Reporters out in the field file stories for the traditional TV or radio platforms, which is then re-purposed into material for text stories on the CBC website. Often, those text stories will accompany the original video or radio reports. All of which is well and good.

But when those stories end up on other platforms that are not owned or controlled by the CBC, that amounts to a taxpayer-financed subsidy for private businesses – and unfair competition for those who don't license CBC's content.

CBC doesn't see it that way, especially as the federal government continues to slash its funding. "There is a 'free marketness' to what we do," said Kirstine Stewart, the head of CBC's English-language services, in an interview. "We are not fully supported by government, and ever since the budget cuts we're actually leaning more toward a more commercially supported than federally supported model. We are in the free market space like others, simply because we're put there by our circumstance."

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Ms. Stewart pointed out that CBC actually used to license its content to, until that BCE Inc.-owned portal opted to get its news instead from its own CTV. (BCE has a 15-per-cent stake in The Globe and Mail.) She suggested that held dangers, too.

"If the [companies] that are vertically integrated start taking exclusivity in the digital market, then that poses more of a problem than what we're doing," she said. "If we keep [CBC content] just to our own platform, it becomes a singular line; everyone gets forced into their own corner." That, she notes, is counter to the wider ethos of the Internet.

Which may be true. But in an environment in which publishers are finding it necessary to charge for their content just to keep the lights on – the Toronto Star this week announced it was laying off 55 employees amid a continuing drop in ad revenue – freely distributed news stories already present enough competition. From the perspective of those legacy publishers, having taxpayers subsidize the competition just seems needlessly cruel.

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About the Author
Senior Media Writer

Simon Houpt is the Globe and Mail's senior media writer, charged with covering the industry's transformation. He began his career with The Globe in 1999 as the paper's New York arts correspondent, covering the cultural life of that city through Canadian eyes. More


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