CANADA

Looking for missing links

Newspaper groups have indeed become too large, too wealthy, too successful

Robert Lewis December 22 1980
CANADA

Looking for missing links

Newspaper groups have indeed become too large, too wealthy, too successful

Robert Lewis December 22 1980

Looking for missing links

CANADA

Newspaper groups have indeed become too large, too wealthy, too successful

Robert Lewis

Although his far-flung companies own 160 newspapers in Europe and North America—including 50 in Canada—Kenneth R. Thomson conceded last January: “There is a limit to how many papers one man, or company, should own.” Helpfully, Lord Thomson of Fleet went on to tell The New York Times that, while his empire* had not yet grown to “ludicrous” extremes, “I’m sure that we will know ourselves if and when we do.” The first public stirrings of a more independent view came last week in Winnipeg and Ottawa, as the Royal Commission on Newspapers opened hearings into the affairs of papers reaching five million subscribers across the land. At the nub of the inquiry is the question of whether the $2.5-billion industry is a service or a scam.

The commission’s findings, due next July 1, are not likely to be any less subjective than Thomson’s. The reason is the stable of hard-nosed media veterans, some bounced from senior jobs in the business, who are gathered under Chairman Tom Kent—himself a former distinguished editor and Liberal party

*It includes, in addition to newspapers, the Hudson’s Bay Co., Simpsons Ltd., Zellers Ltd., North Sea oil wells, cable television and real estate.

reformer during the Lester Pearson era (see box). Kent’s old Pearson office colleague, Jim Coutts, now Pierre Trudeau’s chief of staff, was the key proponent of the Kent Commission, established last September. It was triggered by a stunning series of deals at the end of August in which Thomson closed the money-losing Ottawa Journal and Southam shut down The Winnipeg Tribune—granting the rival chain a monopoly in the two cities. Thomson also withdrew from deals in Montreal and Vancouver, thus handing Southam exclusive control of The Gazette, the Sun and the Province. Thomson had recently also merged two papers in Victoria and sold off The Calgary Albertan, leaving its FP chain with only the Toronto Globe and Mail, the Winnipeg Free Press, the Lethbridge Herald and the Victoria Times-Colonist. As Kent opened last week, the Bureau of Competition Policy was still investigating whether or not to lay criminal charges of conspiracy to restrict competition.

That investigation cast something of a pall over four days of rambling, at times aimless public sessions by Kent in

Winnipeg and Ottawa. Lawyers for Southam and Thomson warned that in light of the government’s legal probe their clients could not be grilled on details of the deals in August—and they weren’t. Instead, the commission heard a series of witnesses from the two communities lament the passing of the papers.

The most eloquent pleas came from the trade itself. In Ottawa, I. Norman Smith, respected editor of the Journal until 1972, declared: “Newspaper

groups have indeed become too large, too wealthy and thus too successful against papers seeking to survive on their own.” The only real sparks of the week were ignited by Jim Rennie, former executive editor of the Journal, who had come to town in July, 1979 (five months before Thomson bought the paper as part of the FP chain), to save an apparently dying afternoon paper. Rennie, now managing editor of The Seattle Post-Intelligencer, testified that the switch of the Journal to a morning edition, and a more sprightly look, raised circulation to within 10,000 of the break-even point (90,000). But only 11 months into a three-year survival scheme launched by the previous owners and before advertising could match circulation gains, Thomson closed the paper. Former publisher Art Wood, who also presided over the death of FP’s Montreal Star in 1979, asserted that, with projected losses of $4.6 million, the Journal could not have been saved. But for Rennie, Thomson’s action was a “pillage of the community for whatever they could get out of it.” Challenged by Thomson lawyer Lome Morphy, Rennie confessed he is “absolutely” bitter about Thomson—a remark that provoked applause from several equally unhappy ex-Journal workers in the Ottawa conference centre.

Senior editors in both Winnipeg and Ottawa conceded that the disappearance of competition has had negative effects—a lament that has been heard in Canada since at least 1969, when a government-ordered report callêd for a change in the competition laws. The present act has been a toothless pussy cat, essentially because it not only requires the Crown to prove a criminal conspiracy in itself but because the actions “prevent,or lessen unduly,competition.” By those lights, the Supreme Court ruled in 1976 that the K.C. Irving interests did not violate the law in acquiring all five English-language dailies in New Brunswick. Only last July, the court decided in the Atlantic Sugar case that, despite a tacit understanding

to maintain historic price levels, the companies did not thereby unduly lessen competition. Since 1968, eight different Liberal consumer ministers have tried to make prosecution easier— and they have failed, largely because the government bowed to powerful bigbusiness lobbies, which included newspaper owners. Current minister André Ouellet is, once again, promising reforms by next spring.

A similar note of déjà vu attaches to the Kent Commission. One popular theory is that newspapers should be forced to announce in advance any plans for mergers and take-overs. That just happens to have been a central recommendation of a report ( The Uncertain Mirror) by Senator Keith Davey. It was published precisely 10 years ago last week. Then Tom Kent was a political associate of Davey’s. One of Kent’s commissioners, Toronto Star editor Borden Spears, was Davey’s executive consultant. Now, the veteran newsmen are back on the trail of a story that is, in a sense, a decade out of date.