Tuesday, September 06, 2005

Magazine postage bills take it on the chin

Magazines Canada is reeling from a massive slap in the face from the Department of Canadian Heritage. DCH has quietly announced, without consultation and with less than 60 days notice, a huge cut in the Publications Assistance Program contribution to individual magazines. This came right after Magazines Canada had been able to take some comfort from a restoration of some funding to the program itself (if only for a year).

Here is some analysis of the cuts provided by Michael Fox, Senior Vice-President of Rogers Media and the Chair of the Magazines Canada's postal committee:

On Nov. 1, 2005, small magazines will face an increase of 7% or more in their postal costs. For high-circulation magazines, the increase will be 35%.

For example, for a 200,000-circulation magazine, PAP now pays 61.66% of postage. As of Nov. 1, that is cut to 50.33% -- a shift of more than 11 percentage points from PAP to the publisher. The publisher's share goes from 38.3% to 49.7% -- which works out to a 30% postage cost increase for the magazine.

There's more bad news to come. Based on current activity levels, PAP will have another huge gap in the next fiscal year. Heritage will need to slash PAP percentages further, effective April 1, 2006, in order to cover a gap for 2006-07 estimated at $8.3 million.

Simply put, the cumulative impact of postage rate increases by Canada Post Corp. (CPC) has devoured all the funds allocated for PAP while the program continues to fund roughly the same volume (212 million copies for 1,200 periodicals).

In May 2005, Magazines Canada leaders had told the government that an additional $7 million in PAP funding was required for the current government fiscal year that ends March 2006 in order to continue the PAP subsidy at the percentage level it has traditionally maintained (averaging 62% of postage costs). Since then, there has been no news and no consultation with the industry -- so the severity of the cuts is a shock.


Anonymous Anonymous said...

It's called the quiet before the storm. The fact that there was "no consultation" was perhaps a very loud clue that something bad was brewing. While the severity of the impact is a shock, it should come as no surprise. What I find shocking, is that this is happening under a Liberal government which is flush with cash.

5:29 am  
Anonymous Anonymous said...

First Canada Post announces it will be launching its own shelter magazine, now this. Something stinks, that's for damn sure.

What might account for the lack of consultation? Hmm, DCH tend to take the month of August off. That's been my experience, historically.

Nothing stings like a funder using their prerogative to make unilateral decisions, and then say, lump it.

11:53 am  
Anonymous Anonymous said...

There is now a campaign underway from Magazines Canada ... stakeholders are encouraged to write their MP and Minister Frulla to express their disgust at both the size of the cuts and the manner in which it was communicated to the industry. Individuals not on the Magazines Canada mailing list who wish to write their MP and are looking for the talking points should visit www.magazinescanada.com or contact info@magazinescanada.com for more information.

From those points, the burning question: "The PAP, by any measure, is a cultural policy success. We cannot fathom the rationale for killing it. In a country dominated by foreign media, the PAP has secured an unprecedented 70% of our domestic subscription market for Canadian content. No other cultural media comes close. Why is the federal government abandoning one of its most successful programs?"

1:30 pm  

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