Financialization and the ‘Crisis of the Media’: The Rise and
Fall of (Some) Media Conglomerates in Canada
This paper examines the cross-cutting dynamics that have reshaped the network media
industries in Canada over the course of the past fifteen years, and with occasional glances
back to the 1980s. Three questions are at its core: First, do new technologies, especially
the Internet, pose fundamental threats to well-established media players or create a larger
media economy within which they can expand? Second, have media markets become
more or less concentrated? Third, are the media ‘in crisis’?
I argue, first, that the media economy has grown substantially and that the rise of new
players such as Youtube (Google), Apple, Facebook, Myspace (News Corp), Wikipedia,
and so on has been especially strong in Canada and added to the media economy, without
cannibalizing the economic base of traditional media. Second, I show that the media
have become more concentrated, and place the ‘big 10’ media firms that have emerged in
Canada since the mid-1990s at the centre of my analysis: Rogers, Shaw, Quebecor,
CTVglobemedia, Bell, Canwest, Torstar, Astral, CBC and Cogeco. Focusing on these
companies and the cross-cutting dynamics shaping the evolution of the network media
industries is essential because no one seems to be collecting long-term empirical data on
the media industries in Canada in a systematic way. This paper helps to fill that void.
Third, I address claims that the ‘media are in crisis’.
Main Argument:
Many identify the steady onslaught of the Internet, changes in media use, and declining
advertising revenues as the main villains in the media in crisis story. The collapse of
Canwest – one of the largest media conglomerates in Canada for the last decade – is often
taken to exemplify such conditions, but worldwide several bastions of the ‘old order’ that
were assembled just before and after the turn-of-the-21st century have subsequently been
restructured (Bertelsmann, ITV), dismantled (AT&T, Vivendi), gone bankrupt (Knight
Ridder, Media News, Tribune, Kirch), or abandoned their earlier visions of convergence
altogether (Bell Globemedia, Time Warner). Even the New York Times and France’s Le
Monde have been forced to find new benefactors. Thus, while conditions in Canada are
unique, the dynamics are global, and one thing in common everywhere is that a weak
press is bad for democracy.
There is no shortage of examples that seem to prove that the media in Canada, as
elsewhere, are ‘in crisis’:
• CTVglobemedia and Canwest closed several tv stations in 2009, before the latter
went bankrupt and was forced to sell its newspapers in late-2009 and its television
operations in 2010.
• TQS, the second private French-language tv network, went bankrupt in 2008 and
was sold the next year.
• Even the CBC’s advertising revenue dropped in 2007-2008.
• Private conventional tv profits fell to 0 in 2008.
• several newspapers -- including the National Post – pared back their publishing
schedule from six days a week to five.
• A slew of lay-offs by the ‘big 10’.
I fully agree that the media are in a heightened state of flux, but argue that the current
woes besetting some media enterprises are not primarily due to the steady onslaught of
the Internet, changes in media use, or declining revenues as advertising shifts from ‘old’
to ‘new’ media. Instead, I argue that current conditions reflect a short-term, cyclical
decline in advertising caused by the economic downturn, and decisively, the accumulated
results of two waves of consolidation (1995-2000; 2003-2007) and the ‘financialization
of the media’. The results, paradoxically, have been greater media concentration but also
media giants that have sometimes stumbled badly and occasionally been brought to their
knees by the two global financial crises of the 21st century (2000 – 2002; 2008 - ). This
is important theoretically because, first, it takes media firms as serious objects of study
but without seeing them as unshakeable edifices and, second, because it advances the
idea that financialization rather than technology, media consumption and advertising
should play the starring role in the ‘media in crisis’ story.
The Growing Network Media Economy, 1984 – 2008
It is one thing to see the media industries as facing tumultuous times, but something else
altogether to see these conditions as cataclysmic. In reality, the media industries have
grown immensely in the past twenty-five years, as Figure l demonstrates.
Figure 1: The Growth of the Network Media Economy, 1984-2008
8000
Internet
Access
6000
Mill $
Cable & Sat.
TV
Television
4000
Radio
Newspapers
2000
Magazines
Internet
Advertising
0
1984
1988
1992
1996
2000
2004
2006
2008
Adding all of the segments in Figure 1 shows that the network media economy expanded
greatly from $12.2 billion in 1984 to $21.4 billion in 2000 and to $32 billion in 2008.
Claims that television is in desperate straights involve a sleight of hand that typically
highlights the relative decline of conventional advertising-supported television, where
profits fell from 11% in 2005, to 5% in 2007, to zero in 2008. Over the long run,
however, profits have been 10-15% for the past decade.
More importantly, the television universe has expanded tremendously to include new
distribution channels, cable and satellite services, pay-per-view, video-on-demand, the
Internet, and so on. There were 48 cable and satellite television services in 2000; today
there are 189. Indeed, the television universe doubled in size between 1984 and 2000,
and then grew to a $14 billion industry in 2008.
Operating profits for specialty and pay television services as well as cable and satellite
distributors like Rogers and Shaw have been a rich 21% to 25% every year since 2002 -two-and-a-half times the level of Canadian industry on average and matched only by
banking (25.2%), alcohol and tobacco (23.6%), and real estate (20.9%). Television is,
thus, not in crisis, but a goldmine!
Trends in the newspaper industry are better described as a continuation of long-term
trends rather than a crisis. Daily newspaper circulation has been in long-term decline
relative to population in the U.S., Britain and Canada since the 1950s, but circulation in
Canada rose in absolute terms until 2000, when 5 million copies were sold, before falling
to 4.7 million in 2005 and 4.1 million in 2009. There has been no downward spike due to
the Internet. Newspaper revenues have not plunged, either. After following the ups and
downs of the economy in the 1980s and early-1990s, revenues increased steadily to $5.7
billion in 2000. They were $5.5 billion by 2008. With operating profits between 12 and
15% between 2000 and 2008, newspaper profits have been high, not low.
Profits recently plunged temporarily for Astral (2009), Canwest (2008-2009), Cogeco
(2009), Quebecor (2007-2008) and Torstar (2008), but this experience mostly – except
for Canwest – coincides with the economic crisis, suggesting that economic forces, not
the Internet, are behind their difficulties. While clearly not all is honky-dory, the Project
for Excellence in Journalism in the U.S. hit the nail on the head when it put much of the
blame for the current state of the press on the industry itself for having been slow on the
uptake with respect to the Internet for the past decade.
Figure 2: Big 8 Media Companies’ Operating Profits, 1995-2009

Note: All dollar figures are expressed in ‘real dollar terms’, with 2010 as the base, and figures for tv
include the CBC’s annual parliamentary appropriation.
A critically important point is that ‘new media’ have not cut into the time people spend
with ‘traditional media’. This is because ‘total media consumption time’ for more than
three-quarters of the Canadian population surged from 46 hours to 62 hours per week
from 2004 to 2007. Canadians have always been intense media users by global standards
and in this age of ‘mass self-expression’ use of YouTube, Twitter, Facebook and
Wikipedia is still well above average. These “new media activities”, as the 2008 Canada
Online report observes, “generally supplement rather than displace traditional media
use”.
Instead of innovating take advantage of these trends, the television industry, like the
press, has mostly tried to thwart the rise of the Internet as an alternative medium for
television. The CBC attempt to use BitTorrent to distribute an episode of Canada’s Next
Great Prime Minister in 2008, for example, was throttled by Bell. Geo-gating and content
rights management technologies are used to preserve the “windows” model. Geo-gating
software limits access to television programs made available online only to Canadian
users, just as in the U.S. with respect to Hulu – the online television venture of News
Corp, NBC-Universal and Disney in the U.S., or the BBC’s iPlayer, or the U.S. cable
companies ‘TV Everywhere’ strategy – a model quickly imported by cables companies in
Canada . Broadcasters have struck some distribution deals with Google, Apple, ISPs, and
so on, but these efforts have been late in coming and hedged about by demands to make
all ‘new media’ players subject to Canadian television regulations.
Media Merger Mania and Bloated Media Behemoths
Perhaps the most important problems lurking in the background of the ‘big 10’ stem from
two bouts of media merger mania that took place, first, during the dot.com years from
1996 to 2000, and again, albeit on a smaller scale from 2003 to 2007. Consolidation is
usually seen as a response to new technologies, permissive regulation, and globalization,
but the financialization of media is arguably more important, yet under-studied.
Kevin Phillips defines financialization as a function of the swelling role of the financial
sector in the U.S. Duménil and Lévy highlight “the tight and hierarchical relationship
between industrial capital and banking capital” as its signature feature. Foster and
Magdoff define it as the growing reliance of the economy on the financial sector in
response to general economic stagnation and over-production, but also as a source of
chronic instability (p. 14). Crotty and Shiller argue that such processes have been
pronounced in the telecom, media and Internet sectors.
The financialization of the media and telecom industries took root in the latter half of the
1990s as a flood of investment poured into mergers and acquisitions, yielding huge media
conglomerates with unheard of capitalization levels but also enormous debts that have
hung around their necks like an albatross ever since. Figure 3 reveals the massive spike
of acquisitions in the telecoms and media industries between 1996 and 2000 and again,
albeit more modestly, from 2003 until 2007, as well as the sharp rise in the market
capitalization of the leading media firms in Canada.
Figure 3: Mergers and Acquisitions in Network Media Industries, 1984-2008
Figure 3 demonstrates the timing in the process of consolidation. Consolidation has not
continued uninterrupted and inexorably, but ebbed and waned in line with changes in
media regulation and broader trends with respect to the financialization of the global
economy. Thus, we see things picking up in perfect synchronicity with the explosive
growth of the financial sector and the flood of investment in mergers and acquisitions in
the latter half of the 1990s, interrupted by the collapse of the dot.com bubble between
2000 – 2002 and picking up again from 2003 until 2007, before falling once again after
being broadsided by the onset of the global credit crisis that first took hold in 2008 and
which continues to destabilize much of the world economy to this day.
Primed by the easy cash of the Telecom-Media-Technology boom, media convergence,
and a green light from the then Liberal Government, media and telecom companies went
on a buying spree. In the peak year of 2000, media acquisitions totaled $7.1b, more than
eight times greater than just five years earlier. Telecoms and Internet acquisitions were
worth more than ten times that sum. The capitalization levels of the largest eight publictraded media firms soared as a result, but collapsed soon after the dot.com bubble burst
and as many of the rival telecom, Internet and aspiring mid-size media companies went
belly-up. As just indicated, a second round of consolidation ensued between 2003 and
2007. Once the dust settled, ten lumbering media giants were left standing (Table 1).
Table 1: The Big 10 Media Firms in Canada, 2008 (mill. $)
Owner
Shaw
(Corus)
Rogers
QMI
Bell
CTVgm
Shaw
Rogers
Péladeau
Diversified
Thomson
(40%), TPF
(25%),
Torstar
(20%), BCE
(15%)
Canwest Asper
CBC
Public
Astral
Greenberg
Torstar Atkinson,
Thall,
Hindmarsh,
Campbell,
Honderich,
Cogeco Audet Family
(80%),
Rogers (20%)
Total
Ind. $
C4
HHI
Market Total Rev Conv. TV Spec & Cable & Press
Cap.
($)
Pay TV Sat. Dist.
(2009)
8,084.2
3,487.6
449 2,040.5
402.4 1,500.2
184
57.6 1,079.9 1,398.6
51.8
1,450
806.4
388.8
Radio
Internet
Access
272
726.1
240
695
438.1
1,391
19,440.1
1,750.7
1,560.7
N/A
3,238
3,284.1
2,944.6
2,288.1
216.4
309.9
51.8
932.9
24.9
N/A
1,780
500.1
2,739
1,590
779.2
750.6
608
1,023.2
336.1
888
111.3
31,148.00
3,565.8
3,045 6,953.5
$5,400
$2,000
$6,200
41.6
615.4
80.6
1929
71.3
87.6
1588.3 2,094.7
77.3
1819.3
61.7
1151.9
54.6
926
459.2
169.3
456.2
1,495.8
160
176
397.5
323
750.6
2
561.5
213.2
Leonard Asper, the ex-CEO and owner of Canwest, once quipped that anyone who still
thinks that the media are concentrated probably believes that Elvis is still alive. Others
argue that the pressing issue is not concentration, but that the fragmentation of audiences
within the digital media universe is yielding a tower of babble, where bombastic voices
and discord trump civil conversation and mutual understanding.
Media ownership and concentration, however, still matter greatly. For one, conditions in
Canada are peculiar. All of the ‘big 10’ media companies, except Bell and the CBC, are
owner-controlled – a situation similar to the family oligarchies who control the media in
South America and Russia versus most capitalist economies, where shareholders and
expert managers are in control. Second, the media are more concentrated than ever. In
fact, the ‘big 10’ media outlets in Canada accounted for 71 - 72 percent of all revenues in
2000 and 2008 -- a substantial rise from 61% in 1996, and further still from 54% in 1992.
This is about twice as high in the U.S., based on the detailed analysis of conditions there
by Columbia University Professor Eli Noam in Media Concentration in America (2009).
Every media sector in Canada is highly concentrated, as the two figures below shows.
Figure 4: Network Media Industries Concentration (CR), 1984-2008
Figure 5: Network Media Industries Concentration (HHI), 1984-2008
The Internet is not immune to consolidation, either. Roughly 94% of Canadian highspeed Internet subscribers gain access from incumbent cable and telecoms providers.
Google’s dominance of the search engine market is growing, and now accounts for 81%
of searches in Canada, with Microsoft (7%), Yahoo! (5%) and Ask (4%) trailing far
behind (CR4 of 97%). Social networking sites display a similar trend. Facebook accounts
for 63 percent of time Canadians spend on such sites, while YouTube (Google) (20%),
Microsoft (1%), Twitter (1%) and MySpace (News Corp.) (1%) make up most of the rest.
The CR4 for social networking sites is 86% -- well-above acceptable norms. The number
of websites, blogs, and so forth continues to grow, but time spent by Internet users on the
top 10 sites nearly doubled from 20 percent in 2003 to 38 percent in 2008. The majority
of the top 15 Internet news sites belong to traditional media firms: cbc.ca, Quebecor,
CTV, Globe & Mail, Radio Canada, Toronto Star, Canwest and Power Corp; CNN, BBC,
Reuters, MSN, Google and Yahoo! cover almost all of the rest.
Media concentration has not gone away and, furthermore, it helps to explain why Google
and Facebook are such powerful forces standing midstream between “traditional” and
“new” media. If media history tells us anything, it is that once the institutional structures
of a new medium are locked into place they stay that way for a long time. Indeed, the
structure of the ‘industrial media age’ set down in the late-19th and early-20th centuries
has only begun to give way to the network media ecology of the 21st century in the past
decade – with no small amount of resistance from entrenched interests all along the line.
Debt, Delusions and the Real Crisis Facing the Network Media Ecology
There is a giant, tangled paradox in all of this insofar that while media conglomerates are
larger than ever, and markets more concentrated, there are signs of disarray all about us.
Why? In addition to the blows delivered by two economic crises in the past decade, part
of the answer lies in the irony that those caught up in media merger mania embraced a
model of the digital media conglomerate and convergence just as they were losing their
lustre elsewhere.
Indeed, by the turn-of-the-21st century, all the major telephone companies in the U.S. had
pared back their tight ties with Hollywood. Microsoft wound down its stakes in cable and
telecoms systems, WebTV and MSNBC. AT&T reversed its move into cable television in
2003, before being sold two years later. AOL Time Warner – the original poster child for
media convergence in 2000 – shriveled to a shadow of its former self, dropping the AOL
label (2003), selling Warner Music (2004), labouring under fraud charges until settling
(2005), and spinning off its cable systems and AOL (2008 and 2009, respectively). By
2009, its market value was $78 billion – roughly a third of its value in 2000. The collapse
of Kirch Media in Germany, the travails of ITV in Britain, and dismantling of Vivendi in
France are yet further examples of crest-fallen media conglomerates formed amidst the
fin d’siécle convergence hype.
So too in Canada have the ‘field of dreams’ visions of convergence floundered. BCE’s
capitalization soared from $15 billion in 1995 to $89 billion in 1999, but plunged to $26
billion three years later and its majority stake in Bell Globemedia was sold for about half
its original value in 2006, then renamed CTVglobemedia. Canwest’s collapse in 20092010 is yet another example of consolidation gone bad. Shaw, Rogers and Quebecor
continue to groan under the weight of huge debts, even though each has benefitted from
the massive growth in digital television and high speed Internet access and Quebecor has
enjoyed considerable success presiding over the star system in Quebec, popular programs
such as Star Academie and newscasts that rival those of the CBC’s Reseau d’Information.
The weighty debt-loads for eight-out-of-the-Big 10 media companies that are publiclytraded are indicated in the Figure below. Altogether, the total debt for these companies
ballooned from $8.8 billion in 1995 to nearly $25 billion in 2001 – where they have
stayed hanging like an albatross around the industry ever since.
Figure 6: Leading Media Firms and Debt, 1990 – 2008
9000
8000
7000
6000
5000
(mill. $)
4000
3000
2000
1000
0
1990
1992
Astral
Rogers
1994
1996
1998
Canwest
Shaw
2000
2002
Cogeco
Torstar
2004
2006
2008
Quebecor
BCE
Figure 7: Leading Media Firms and Debt-to-Equity Ratios, 1990 - 2008
6.00
Rogers 10.8
Debt/Equity
5.00
4.00
3.00
2.00
1.00
0.00
1990
1992
Astral
Quebecor
Torstar
1994
1996
1998
Canwest
Rogers
BCE
2000
2002
2004
2006
2008
Cogeco
Shaw
All Industries' AVG
As figure 6 illustrates, the mountain of debt acquired by the eight major media companies
soared from $8.8b in 1995 to $24.8b in 2001 and continues to hang about the industry to
this day. There are no hard and fast rules as to when there is too much debt. However,
Figure 6 demonstrates a clear break with historical norms after the mid-1990s, although
Rogers and Quebecor were already pace-setters for the trend to come.
Likewise, there are no fixed rules regarding appropriate debt-to-equity ratios, however,
historical norms and informed views provide a useful guide. As Figure 7 shows, before
1996, most firms maintained a debt-to-equity ratio of less than 1, and this continued to be
the case for Astral and Torstar, which are considered to be fiscally conservative entities.
The Bank of Canada gives a sense of appropriate debt levels when it applauds the decline
of corporate leverage from over 1 in the early 2000s to roughly .85 in 2009, while urging
an even greater return to corporate fiscal probity. Melody argues that a debt/equity ratio
above 80% “is unsustainable in the long-term [and that] running a firm’s debt up to an
unsustainable level . . . is simply acquiring short-term cash at the expense of long-term
development and increased financial risk and costs” (p. 2). Most media firms – Canwest,
Rogers, Shaw, Cogeco, Quebecor --in Canada have consistently been well-above that
level for most of the past decade.
Saddled with debt and bloated financial structures, these companies have been incapable
of sustaining high levels of investment and innovation. Indeed, Canwest spent more
annually on debt over the past decade than it did on Canadian content! At the end of the
1990s, Canada’s network media infrastructure consistently ranked at the top of ‘global
league tables’. After a decade of stagnant investment, flaccid competition, and weak
policies, however, as a 2010 study by Harvard University’s Berkman Centre for Internet
and Society shows, this ranking has dropped to the middle or bottom-of-the-pack.
Figure 8: Stagnating Network Infrastructure Investment, 1984 – 2009
Domestic tv program production continues to fall far short of the pledges made by these
companies during regulatory reviews, while the cost of U.S. programs has sky-rocketed.
With little original content of their own, broadcasters are ill-equipped to cash in on the
spectacular growth of tv worldwide and, critically, vulnerable to rights holders who have
no problem playing ‘traditional’ and ‘new’ media providers off one another for tv and
Internet distribution rights.
A nasty media work culture has emerged, too. Indeed, Canwest and Quebecor, especially,
have ratcheted up conflict with its media workers to levels not previously seen in Canada,
with the latter engaging in no fewer than nine lock-outs in the past ten years. Quebecor
argues opportunistically that newspapers everywhere are “in a state of crisis, given that
the entire world is experiencing an economic crisis and is eager to embrace change”. Yet,
far from innocents caught up in events not of their own making, Quebecor, Canwest,
Cogeco, Bell Globemedia, Rogers, Shaw, and so forth took the lead in fostering the same
conditions in the media industries that gave rise to the global financial crisis in general.
Concluding Comments
Ultimately, the network media ecology has become larger and, by and large, remains
highly profitable. There are no clear cases where specific media sectors are ‘in crisis,’
although the two global economic crises of the 21st century have dealt punishing blows
to some media conglomerates. In fact, at the very core of the network media industries
are a number of stumbling media behemoths that have been rigged to fail, if measured by
their capacity to create the kind of open, digital network media system needed for the
21st century. If a ‘free media’ is essential to democracy, then surely we cannot let the
fortunes of the latter to hinge any more than it already does on those who have done so
much to drive the current media system into the ground.