Magazines Ontario asks province for $20 million investment in industry

Magazines Ontario is asking the Ontario government for a new $20 million annual contribution for a government/industry partnership to stimulate investment in the sector. The document also asks for the development of a refundable tax credit for Ontario magazines.

The pre-budget submission refers to a recently published independent study conducted for the Ontario Media Development Corporation which recommended growth and job creation strategies and the creation of a tax credit for magazines -- the only cultural industry in Ontario without one.

While Ontario magazines have proven adaptable in meeting competition in the past [the submissions says], their ability to do so today is constrained by low profitability and lack of access of capital. This is due in part to intense competition from US publications which enjoy economies of scale Canadians cannot match and to a lower share of total advertising expenditures placed in magazines in Canada as a result of decisions made in other countries.

Online media is a challenging platform for several reasons:

• There is no consensus about an Internet business strategy that generates revenue
• Low profitability and uncertainty as to likely online revenues make it difficult for publishers to make the required heavy investments in digital media

However, with the right investments, publishers will be able to create new content for many platforms including online, events, screen based and print by extending existing respected “brands” to new audiences. The potential is there if the capital to invest can be secured.

Magazines Ontario says the new government investment recommended would complement publishers' own investments and could be made in

• Research, particularly in advertising trends
• Marketing and promotion
• Training
• Collective programs and purchasing
• Developing and implementing measurement tools of all kinds including tracking Internet usage
• Gathering and disseminating information and expertise to support brand extension activities
  

The brief calls a refundable tax credit "the most effective tool available to the Ontario government to help Ontario’s magazine publishers" and says among its many attributes would be the fact that it would not be restricted to profitable, tax-paying fimrs but could provide opportunities for newer, smaller and growing publishing groups.

In addition to the funding recommendations, Magazines Ontario's submission returned once again to a couple of perennial issues:

• to try and end the Ontario government subsidy of the Liquor Control Board of Ontario's magazine Food & Drink to the detriment of private sector magazines; and
  
• to ensure that foreign publishers pay their fair share of blue box levies, which they now mostly ignore.