Saving Journalism (Pt. II): The Mega-Fund

Richard Stursberg, author, former CBC executive, former Ottawa culturcrat, and current Garth Drabinsky collaborator, has emerged with the latest plan to drag Canadian cultural policy out of its pre-digital past and, in the process, save Canadian journalism from impending doom.

Stursberg wants a new agency, the Canadian Content Investment Agency (CCIA), which would be an all-purpose, platform agnostic, content agnostic, and producer agnostic mega-fund.

In layman’s terms, the mega-fund would be open to both conventional and digital media, old and new companies, and all forms of content, whether video or text or audio. It would also be at arm's length from the government to inhibit meddling.

How to fund the mega-fund? Several existing funds, including Telefilm Canada, and Canadian Media Fund, would be collapsed into one another (about $800 million) and topped up with new money. The new money would come from an expanded application of old taxes: Stursberg wants the government to require over-the-top operators like Netflix to collect and pay HST on their services. He would also collect HST on digital advertising. These measures, by his math, would bring the government $350-$464 million by 2020.

Stursberg also asks Ottawa to consider application of section 19.1 of the Income Tax Act to digital advertising (it currently applies to traditional advertising only). This puts him in league with the Friends of Canadian Broadcasting (see Saving Canadian Journalism Part I). While the Friends were tentative in putting a dollar amount on this measure, Stursberg sees a huge win for Canadian media companies: “If the federal government were also to apply section 19.1 of the Income Tax Act to digital advertising as it has to traditional advertising, it would have increased the revenues of Canadian media companies by between $482-$820 million in 2014, rising to $827-$1.4 billion in 2020.”

Yet another potential source of funds would be to abolish production subsidies to foreign companies operating in Canada. Stursberg would leave lower levels of government to play the economically dicey game of subsidizing U.S. movies and television shows filmed this side of the border.

The particular mechanism that the mega-fund would use to support CanCon is the tax credit. Content producers would have to risk their own capital up front; they would get a portion of their production, promotion, and export marketing costs returned to them in the form of tax credits when all is said and done. This is similar to how broadcast production is funded in Canada at the moment, although Stursberg’s approach is more inclusive and less lavish. His tax credits, available to old and new journalism outfits, neatly sidesteps the issue of whether to bail out old news operations or fund the next generation. It does both, requiring tax credit recipients to demonstrate some viability in the marketplace.

The detail can be found here. There is a lot of it, including a lot of math that I haven't covered here, making Stursberg's probably the most fully-formed proposal launched since Melanie Joly announced a reconsideration of cultural policy last February. Rogers (where I work) was a funder of the paper. Although I was not involved, I am pleased that we’re thinking about these things in a constructive and unselfish way (the telcos, under this plan, continue to pay what they’ve always been paying to support Cancon). I’m reserving judgement on all such proposals until later in the process but I think it’s safe to say that Stursberg’s makes a lot more sense than what exists today.

There will be an event at University of Ottawa tonight, hosted by my friend and former colleague Paul Wells, at which Stursberg, ACTRA’s Ferne Downey, Professor Michael Geist and the Globe’s wonderful cultural critic Kate Taylor discuss this paper and related ideas.