Industry phone lines were buzzing today with news of a sweeping overhaul proposed for the Canada Magazine Fund and Publications Assistance Program administered by the Department of Canadian Heritage. Masthead is compiling reaction and analysis from publishers and industry associations; watch for uploads over the coming days.

The proposal, prompted by several factors including the imminent withdrawal by Canada Post of its $15 million contribution to the $60 million PAP fund, is outlined in broad strokes at this point. DCH is proposing to collapse the CMF and PAP programs into one new super-program, dubbed the Canadian Periodical Fund, affecting both magazines and non-daily newspapers (the latter receive postal subsidies under PAP).

But DCH will be consulting with the industry in various ways between now and April 25 to put flesh on the skeleton of the new program. It has released a Discussion Paper and details of the consultation process on its web site here.

The new program would have two components, Aid to Periodical Publishers (worth 95% of the funding) and Collective Initiatives (worth 5%). The first component would replace current funding under the CMF and PAP for editorial and distribution support, possibly with one annual grant based on a to-be-determined formula. The second would deal with industry-wide initiatives such as marketing and professional development.

While the combined CMF and PAP funds are currently worth $76 million, DCH says it will not release a final budget for the new program until after the distribution mechanisms are worked out. “The Department recognizes that the budget for periodical programs will be of interest to those participating in these consultations, but these consultations will focus exclusively on program design. The funding decision will be made following the consultations,” it says.

The Discussion Paper asks publishers and the industry to consider many crucial questions and the effect of program changes on things such as cash flow. In bold face type it warns:
“All publishers and associations that currently receive funding from the Canada Magazine Fund and/or the Publications Assistance Program can expect that their funding will be affected by this redesign. Their participation in this process is encouraged.”

Key discussion points include:

• With Canada Post no longer contributing to the postal subsidy, DCH proposes to open up competition by allowing publishers in the program to use alternative distribution services. In the past, publishers could only receive the postal subsidy if they used Canada Post.
• Publishers receiving the current postal subsidy essentially get a grant every time they mail their magazines. How would an annual grant, instead, affect cash flows?
• A relatively large share of program spending is received by a relatively small number of large circulation publishing companies. Is this “an appropriate and effective use of public funds”? The largest 20 publishing companies, as a group, receive close to 75% of the PAP budget for all of their eligible titles. In the CMF’s Support for Editorial Content component, the largest 20 publishing companies, as a group, receive close to 65% of the budget for all of their eligible titles. As of 2003 (latest stats available), there were 1,633 publishing companies in Canada.
• To improve program efficiency, it is proposed that publishers would apply annually as a company, rather than applying for each individual title as is currently the case.
• How should the program recognize the digital transformation that is sweeping the industry? Should online-only publications be eligible, along with online sites that are extensions of existing print brands?
• Should funding be increased to periodicals that contain higher amounts of Canadian content? Is the existing definition of Canadian content adequate?
• What are the special issues facing certain types of publications, such as official-language minority, ethnocultural, rural and farm titles?
• Should the funding formula be adjusted to increase support for small and medium publishers to encourage industry diversity and growth? Also, should support differ between new and long-established publications?
• Should funds be directed to publications whose investment in editorial content is not supported by high levels of ad revenue
• Is it appropriate for the programs to include measures dealing with environmental protection?

 “A range of stakeholders from the Canadian magazine and non-daily newspaper industries will be invited to participate in roundtable discussion meetings held in the following cities: Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Halifax,” DCH states on its web site. Exact dates and locations will be sent to the invited participants.

But any interested party can write to periodicals@canadianheritage.gc.ca. DCH has posted “ten questions for you” to encourage feedback on the proposals; those questions can be found here.