Canadian Magazine Industry News
21 January 2010,     OTTAWA
Canada Periodical Fund: Winners and losers
THIS STORY HAS BEEN UPDATED: The new Canada Periodical Fund announced yesterday is the biggest shake-up in federal support for the magazine industry since the launch of the now-defunct Canada Magazine Fund in the late 1990s. Based on an analysis of the final year of the Canada Magazine Fund and the Publications Assistance Program, and on the rules for the new Canada Periodical Fund, here is Masthead’s assessment of the winners and losers under the program:

LOSERS:

The Big 5:
Five of Canada’s largest magazines all used to receive more than $1.5 million in combined CMF and PAP subsidies. The new CPF caps total grants to any one magazine at $1.5 million (a few titles are near the cap, such as Châtelaine – French). Here’s who will lose, based on the last year for which grants are listed (2008-2009) on the Department of Canadian Heritage (DCH) web site:

Maclean’s: $1.45 million less under the new regime
Canadian Living: $1.36 million less
Chatelaine (English only): $1.2 million less
Reader’s Digest (English edition only): $728,558 less
Canadian House & Home: $123,492
Total to be re-distributed: approx. $4.9 million

Magazines Canada had requested the cap be phased in given brutal advertising conditions, but DCH was unmoved.

Small literary and arts magazines:
The new “floor” of 5,000 annual paid circulation means many small-circulation arts and literary publications will be out of the program. (An arts quarterly, for example, would now require a per-issue paid circ of 1,250 to qualify.) The amounts these titles receive are small compared to large commercial titles—typically a few thousand dollars—but huge for the magazines involved, which rely on small mastheads and scant resources.

Many of these publications also receive funding from arts councils, but the Canada Council has said it will not close the gap between what these publications lose under the CPF and what they receive from the Canada Council.

The Facebook-based protest against the 5,000 floor was unsuccessful, and now harried small-mag publishers are scrambling to get their paid circulations over 5,000, find other sources of funding, or face drastic cuts.

Professional association magazines:
Many titles published by professional associations used to receive substantial funding under the CMF, PAP, or both, and now they will be cut out. For example, the Canadian Medical Association Journal received a combined $646,482 in CMF and PAP funding in 2008-2009. Other groups such as Canadian Institute of Chartered Accountants received hundreds of thousands for their publications.

DCH struggled over the definition of “association” under the new CPF, because many consumer magazines are in fact published by associations or societies; for example, Canadian Geographic is published by the Royal Geographical Society of Canada.

In the end, DCH ruled that magazines published by “professional” associations meeting these conditions are ineligible:
Is directly owned by an association. Joining the association is necessary to maintain a professional status which is recognized by a federal or provincial statute. Joining the association includes paying professional dues which are deductible under subparagraph 8(1)(i)(i) of the federal Income Tax Act.

WINNERS:


Ethnocultural, aboriginal, official language minority and GLBT magazines:
Magazines or non-daily newspapers published by ethnocultural, aboriginal, official language minority and gay-lesbian-bisexual-transexual groups, meeting all of the other criteria, are exempt from the minimum 50% paid or sponsored circulation rule. These publishers, with the exception of GLBT publishers, are also exempt from the 5,000-per-year paid circulation minimum. GLBT publishers must meet the 5,000 minimum. Typically, these publications receive grants in the four- or five-digit range.

Magazines with large newsstand circulations:

Under the old PAP, paid newsstand circulation counted towards the 50%-paid minimum eligibility, but was not part of the actual subsidy amounts, since these copies were not mailed through Canada Post. Under the CPF, paid newsstand copies will now be part of the formula that determines the actual grant, meaning publications with large newsstand circulations will likely see an increase in total federal funding.

This particularly affects Quebec, which has a higher proportion of newsstand-oriented titles than the rest of Canada. For example, the weekly 7 Jours has a single-copy circulation of about 88,000, yet only 2,000 subscribers. It received a PAP subsidy of only $54,725 in 2008-2009. The weekly Western Producer, a farm publication with a similar total circulation but almost entirely through the mail, received a PAP subsidy of $1.8 million (see below).

Watch for smiles on the faces of newsstand-oriented publishers. (As an aside, this could help Tory fortunes in Quebec given the beating the party took in the last election over its withdrawal of support for arts programs.)

Farm publications:
Agricultural publications are exempt from the $1.5 million cap on grants based on the special contribution they make to Canadian society, according to the government. As far as Masthead can determine, this only affects one publication to date, The Western Producer, which received $1.8 million in PAP subsidy in 2008-2009. The weekly has a paid circulation of 61,000 with offices across western Canada, but is headquartered in Saskatoon, which is represented by Tory MP Maurice Vellakott.

Everyone else not in the Losers category:
Given that the new fund is roughly equal to the total of the old CMF and PAP, the fact there is a $1.5 million cap on the large titles, the fact that many titles have shuttered over the recession, and the fact that small arts and especially professional association publications are out of the program, it stands to reason that more funds will be distributed to the remaining magazines in the program—the majority of titles.

Presumably this will benefit large publishers, too. While Maclean’s (Rogers) and Canadian Living (Transcontinental) will suffer cuts, sibling titles such as Flare and Elle Canada (respectively) could conceivably receive more under the new regime.

Only DCH knows for sure, based its modeling. In the next several months, publishers will find out, too.


— Staff
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