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Canada
Nicholas Stein
Stein is CJR's assistant editor.
For the second time in three years, trade officials in the U.S. and Canada have come to legislative blows over "split runs" -- Canadian editions of foreign magazines. Parliament was poised in December to enact Bill C-55, banning foreign publishers from selling space to Canadian advertisers in their split run editions. Once passed, the act would grant the Ministry of Canadian Heritage sweeping powers to investigate potential violators, who could be fined as much as $250,000 (Canadian) if convicted.
Should publishers of current split runs like Time and the New England Journal of Medicine be quivering in fear with every knock at the door? Not if C-55's supporters are to be believed. "We are more concerned about preventing new split runs from entering our market," says Lynn Cunningham, director of the magazine program at Toronto's Ryerson School of Journalism.
Time Canada's New York-based, Canadian-born editor George Russell seems far from convinced. He worries about a C-55 clause that limits the ad sales of current split run publishers "to an extent no greater than . . . the year before" the act was introduced. Rather than a preventative measure against publications still on the drawing board, C-55 will "more likely be used on a real company in the real world," says Russell, his voice rising to an invective-laden crescendo. "As the split run with the largest readership in Canada [circulation: 320,000], we are just about the only company this law can be used against."
Not so, insist supporters of C-55, who maintain that the final wording of the act will reflect the government's intention to exempt current split runs from punitive action. "The law was never intended to be a trap on Time magazine," says François de Gaspé Beaubien, president of the publishing division of Telemedia, and spokesman for the Canadian Magazine Publishers Association (CMPA).
Bill C-55 is only the latest in a series of cultural initiatives, dating back to 1965, intended by the Canadian government to protect its magazine industry from what it considers unfair competition from larger, wealthier U.S. publishers. Canada has never closed its borders to American magazines, which garner about 80 percent of all newsstand sales. Rather, it has sought to penalize the foreigners who publish split runs, and the Canadian companies that advertise in them. In 1997, after a challenge by the U.S. Trade Representative, the World Trade Organization (WTO) ruled an earlier Canadian initiative, Bill C-103, invalid under the General Agreement on Tariffs and Trade. The WTO directed Canada to remove the law, which had levied an 80 percent excise tax on ads in split run editions. The cutoff date was October 1998 -- the same month its replacement, Bill C-55, was introduced.
For Russell, Canada's magazine policy has enabled it "to wrap itself in the flag of culture with what is essentially a bankrupt economic argument." In Canada, magazines receive only 9 percent of the total advertising pie, while their counterparts in the U..S. get between 12 and 14 percent. Russell thinks that if Canadian advertisers were allowed to buy ads in split runs, they would transfer some of the money they spend on television, radio, and newspaper advertising into magazines of all kinds. And if Canadian magazines were forced to compete for ad dollars with split runs, Russell says, their editorial product would be much stronger.
Telemedia's Beaubien, who lobbied heavily for the passage of C-55, paints a vastly different economic picture: "An American publisher can take his American magazine sold in Canada, rip out the ads, and replace them with Canadian ones." Then, with virtually no increase in their editorial costs, American publishers could offer substantially cheaper ad rates to Canadian advertisers than to clients in similar-sized U.S. markets. In a brief he submitted to Parliament's Standing Committee on Canadian Heritage, Time Canada counsel Ron Atkey responded to this accusation by pointing to his magazine's advertising rate card, which is 9 percent higher on a cost per thousand basis than its primary Canadian competitor, Maclean's (circulation: 512,000). Also, Time Canada's yearly subscription fee of $77 (Canadian) is $26 higher than Maclean's. (Time Canada publishes somewhat more Canadian and international stories and less American material than Time U.S., but otherwise the two editions are much alike.)
"What they print on their rate card is pure hogwash," retorts Beaubien angrily. "The real question here is the difference between free trade and fair trade. The U.S. doesn't permit foreign ownership of radio or television stations. If the situation were reversed, and 50 percent of magazines sold in America came from Canada, including 80 percent of all newsstand sales, I wonder how long it would take Congress to pass a similar bill."
Ultimately, the fate of C-55 will depend on whether the WTO accepts its definition of advertising as "services" instead of "goods." (Services are not part of the same GATT accord that prompted the WTO to outlaw Bill C-103.) Even those in favor of C-55 concede it will probably not hold up to future WTO scrutiny. "It's a pretty creaky piece of legislation," says John Macfarlane, editor of the monthly Toronto Life. "The world is moving in an anti-protectionist direction, and sooner or later the Canadian government will no longer be able to protect its magazine industry. I don't think Canadians have the same bond with their magazines that they once did, and the will of American publishers to crack the Canadian market has not abated."
