BUSINESS WATCH

A time to respect the law of the land

Peter C. Newman March 1 1993
BUSINESS WATCH

A time to respect the law of the land

Peter C. Newman March 1 1993

A time to respect the law of the land

BUSINESS WATCH

PETER C. NEWMAN

Unless the government of Canada decides to enforce its own regulations, the first so-called Canadian edition of Time-Warner’s Sports Illustrated will go on sale across this country on April 5, undermining and perhaps destroying what’s left of Canada’s magazine industry. For the third time in three decades, the powerful Time organization is challenging the advertising base of domestic publications by dumping already-paid-for U.S. editorial product on our market, and wrapping it, like rotten fish, in a thin layer of local content, so that it can be sold to advertisers as a “Canadian” product I can’t pretend to be an impartial witness to these corporate manoeuvres, because as editor of this magazine, I fought the original Time lobby in the mid-1970s—and won. It was Ottawa’s agreement with our contention that Time magazine should be treated exactly for what it is—an American publication—that allowed us the advertising room to turn Maclean’s into a newsweekly. What was involved—then and now—is interpretation of Canada’s tariff item 9958, which enshrines the notion that foreign publications should not be allowed to recycle their editorial content by dumping it into Canada, replacing the original U.S. ads with Canadian advertising pages that might otherwise appear in our own domestic publications. At the same time, Section 19 of the Income Tax Act was amended to encourage Canadian business to use homegrown media by denying the usual tax deductions on money spent in foreign magazines.

Since these measures were enacted, Ottawa has had little trouble enforcing them. Whenever American publishers thought about launching Canadian editions, they were reminded of the rules, and backed off. But not Time. Its executives are so certain of victory in the current round that they’ve already held a launch party for their “Canadian” edition of Sports Illustrated and even published a rate card. They’re planning to sell full-page, four-color ads for $6,250,

By legitimizing a ‘Canadian’ Sports Illustrated, Ottawa would allow every other U.S. magazine to invade this country

compared with $25,400 for similar space in Maclean’s. As a further comparison, ads in U.S. regional editions of Sports Illustrated for markets similar in circulation to the “Canadian” edition typically cost about $13,000, double the Canadian rate. That kind of discounting would destroy Canada’s magazine industry, eating up our periodical advertising revenues, already weakened by the impact of television and the dismal state of the economy. By legitimizing an ersatz “Canadian” edition of Sports Illustrated, Ottawa would allow every other American magazine (40 of them have Canadian circulations in excess of 50,000) to go ahead and invade this country.

As Catherine Keachie of the Canadian Magazine Publishers Association points out, a three-per-cent shift of advertising dollars to U.S.-owned publications would wipe out the domestic industry’s already slim profit margin. We suffered that kind of diminution once before, between 1950 and 1972. The Canadian editions of Time and Reader’s Digest appropriated so much ad space during those years that 200 Canadian magazines with a combined circulation of 10 million copies were forced out of business. They in-

cluded such well-known titles as Mayfair, Liberty, Canadian Home Journal, not to mention a Canadian magazine called Sports Illustrated, started long before its U.S. counterpart. Only a $100,000 grant from Imperial Oil allowed Saturday Night, which had temporarily suspended publication, to survive.

During the hearings of a royal commission apppointed to examine the issue, Larry Layboume, then managing director of TimeCanada, closed his submission with the smug declaration, “I invite the commission to consider whether Time magazine in Canada is not in all essential respects a Canadian periodical.” That was more than commission chairman Senator Grattan O’Leary, the distinguished former editor of The Ottawa Journal, could stomach. He telephoned Time publisher Henry Luce (the Conrad Black of the 1950s) and asked him to testily. On Jan. 17, 1961, the mighty Luce mounted the witness stand and made the definitive statement on the true status of his magazine. “I may be in some disagreement with my colleagues,” opined he, “but you said, sir, you wanted me to be very plain—I do not consider Time a Canadian magazine.”

Neither is Sports Illustrated.

Another exchange I recall most vividly was a private conversation I had with James Roberts, who, during the early 1960s, was deputy minister of trade and commerce and had just returned from a visit to the American state department, where the Time issue had been discussed. Roberts, who was one of those mandarins of impeccable demeanor and who ranked getting excited with wearing brown suede shoes as something that one simply doesn’t do, was all shook up. “You know,” he told me, “I wouldn’t have believed it before I went to Washington, but there seems to be nothing, literally nothing, we could suggest that would upset the Americans more. I had the distinct feeling that if we dare touch the Canadian operations of Time, the state department would view it as a far more serious matter than if, for example, we sold armed tanks to Fidel Castro.”

In the fall of 1985, Time tried again, but failed, to break down the barricades. The magazine mounted a mega-lobby to persuade the Mulroney government that, as part of its free trade package, it should rescind the legislation protecting Canadian magazines. With Time Inc. back again on the warpath, it’s worth quoting Luce again. At Time’s 40th anniversary party, a glittering affair held in 1963, he proudly declared: “The whole concept of the American proposition requires Time to exist.” Luce was right. Periodicals do have a peculiarly strong identification with their countries of origin; great magazines are woven into the dreams and memories of a people. But American dreams and memories are not ours. As Senator O’Leary wrote in his commission report so many years ago: “Only a truly Canadian periodical press, one with the feel of Canada and directly responsible to Canada, can give us the critical analysis, the informed discourse and dialogue which are indispensable in a sovereign society.”