Books

How Canada Sold out Its Publishing Industry

The sale of a beloved Canadian publisher to a foreign entity—in the face of laws prohibiting such transactions—may be one of the country’s worst cultural crimes

NoOneBlinked
The Walrus / kvasay

This is a story about the slow, secret murder of Canada’s nationalist publishing policy. More specifically, it’s the story of how the late philanthropist Avie Bennett managed to hand over McClelland & Stewart, Canada’s longest-lived and best independent publisher, to a foreign entity, in spite of the Investment Canada Act, which forbids such a sale without government approval.

It was a curious transaction that involved the sale of shares to Random House of Canada along with the apparent gift of control of the company to the University of Toronto. At the press conference Bennett gave at that time—late June, 2000—he’d said: “To achieve the survival of one great Canadian institution, I have given it into the care of another great Canadian institution.” The unwary believed he’d passed McClelland & Stewart (M&S) to U of T to have and to hold forever, that M&S would remain Canadian in perpetuity.

Wrong.

In fact, he’d created a brilliant method to free himself of the M&S albatross, to cash out while handing it off, piece by piece, to the largest foreign-owned publisher in the country. He’d found a way to get the federal government to declare this re-arranged M&S as “Canadian” in spite of the fact that its establishing agreements flew in the face of federal law and policy. That press conference actually signalled the slow-motion destruction of the nationalist publishing policy credited with making Canadian literature possible, a policy originated many years earlier just to keep M&S alive and Canadian, and the first step toward the submergence of M&S in the Bertelsmann media empire, headquartered in Gütersloh, Germany.

By 2012, though the government kept saying the policy remained intact, foreign-owned companies dominated Canadian publishing and many independent Canadian publishers had gone bankrupt, were about to go bankrupt, or had been shut down. All that remained of M&S was its colophon—stamped anew on the spines of a few fresh titles each year and displayed on the website of Bertelsmann-owned Penguin Random House Canada. M&S now has a virtual life. Its name lives on though its corporate body has been subsumed within a foreign entity. The nationalist publishing policy, on the other hand, is just plain dead.

The M&S handover to a foreign owner was the direct result of laws and policies written to promote the opposite result. For a time, they worked as they were supposed to. For a time, they led to a flowering of literature about Canada by Canadians, some of it appreciated far beyond this nation’s borders, some of it universal in its reach. But legal walls are like real ones: they call up great ingenuity from those with an economic need to circumvent them. Our laws and policies were soon hollowed out by those determined to advance their private interests, and by civil servants happy to assist.

In a way, then, the M&S story offers succor to those who argue that globalism is the future. Yet it also gives support to those who think a national culture is essential to sovereignty and security, and must be protected by law and practice. In other words, this M&S narrative has general application though, above all, it’s a Canadian story, a story that could only have happened here. It demonstrates how Canadians wield power, how well-placed Canadians band together to do things forbidden to those who have none. It’s about a smart, beloved/feared man who, seeking long-term redemption, teamed up with Canada’s most able lawyers to get it; how a leading nationalist got around the rules shielding the sovereignty of the national mind. It turns out that nothing could be more Canadian than that.

People who publish and distribute books in Canada have mythologized their business as a Social Virtue for close to seventy years. (In New York, they don’t distinguish the book business from any other because in New York all business is Virtuous.) Books made in Canada, so long as they are not self-help tracts or cookbooks, are widely considered to be Good Things that any Right Thinking Person should purchase during the Holiday Season, the more the better. Civil servants who have doled out hundreds of millions of dollars over four decades to Canadian-owned publishing companies, in the form of grants and tax credits, take this one step further by adding the phrase “vital to national sovereignty.”

On the Canada Council website, you can find lists of Canadian-owned publishing companies that have been awarded many different kinds of grants to defend Canada’s mental borders. The Canada Council’s website has changed recently to reflect a new vision of who and what it wants to fund, but since the early 1970s, it has supported with public money things like author tours, the publication of literary fiction and non-fiction and its marketing and promotion. The Department of Canadian Heritage offers publishers support by various means, but especially from its Canada Book Fund—the fund distributes about $39.5 million a year. Ontario, where two thirds of English-Canadian publishing companies dwell, offers publishers grants from its own arts council. In addition, the Ontario Media Development Corporation administers another book fund and tax credits.

Yet Canadian-owned and controlled publishing companies are the endangered coral reefs in what federal civil servants call the publishing ecosystem. Reports on the publishing industry demonstrate that almost no Canadian-controlled publishing companies could survive without government aid. In some circles, this tenuous existence is regarded as an inverse measure of social value which may be why owning the means to publish stories by Canadians has been treated as a cleanse by some who got rich through less laudable means (such as manufacturing components for military vehicles or land development).

Those in charge of handing out civic prizes, such as honorary degrees, Orders of Canada and of Ontario, have rewarded owners of Canadian publishing companies for their sheer endurance as they struggle to: meet payroll; assure whining authors that everyone interested did get a copy of their latest tome; explain why a third of the books they printed the previous year were returned unsold by the one dominant Canadian bookseller in the country (who gets a significant proportion of revenues from household goods and toys).

I can’t think of an industry with so little economic clout that is nevertheless so well-connected to the powerful. This connection could be described as transactional. On the one hand, Canadian publishers have a desperate need for government money which requires at least defensive familiarity with those who decide how much will be on offer. On the other hand, politicians need public platforms unsullied by voices other than their own. This perhaps explains the abundance of political memoirs written by people running for, leaving, or considering public office.

Perhaps because funding is available, the number of Canadian publishing companies has been growing even as demand for their product has been shrinking: in 2013, there were three times as many Canadian publishing companies as there were twenty-five years before. (That number is expected to fall over the next five years.) The number of Ontarians with full-time jobs in book publishing was about 1600 in 2012, but those jobs are precarious and the well-paid ones are the hardest to hang on to. Salaries are low according to an industry survey conducted by the trade publication Quill & Quire in 2013. That year, entry-level editorial staff earned between $25,000 and $35,000 a year while a person working as the president/publisher of a Canadian-owned company (half of which earn revenues of less than $1 million a year) was paid about $57,000. Their counterparts working for foreign multinationals earned about $138,000.

Multinational-owned publishing houses utterly dominate the Canadian publishing marketplace in spite of decades of support for Canadian-owned entities, and laws and policies aimed at changing that balance. One foreign-owned entity—Penguin Random House Canada —has cornered 32 percent of the Canadian trade book market. (A trade book is one aimed at the general book buyer. Educational publishing is aimed at schools, universities, or specialists in their fields of knowledge.) This level of market concentration has drawn little attention from the Competition Bureau. Why? The Competition Bureau is mainly concerned about an abuse of market power that leads to rising prices for consumers. It doesn’t appear to have investigated why retail prices for paper books have remained about the same over the last decade in spite of book unit sales declining and in spite of the advance of smart and just-in-time technologies that should have made production, distribution, and marketing more efficient, and lowered costs.

Yet such concentrated ownership does have a big impact on the diversity of ideas: two people mainly dominate decision making on what will be offered to the public by Penguin Random House Canada even as the rest of its staff play musical chairs for their jobs.

It should not be a surprise that just about everybody in the Canadian book business has met, worked with, or heard about everybody else. I can’t think of a group whose members are more intimately entangled. Canadian publishers used to buy and sell pieces of each others’ companies as they staggered to the edge of bankruptcy and back again. One market research firm believes that this consolidation phase is over and that any advantages from mergers have been squeezed from Canadian publishing. Many employees who once had full-time jobs with some benefits must make do now with whatever freelance gigs they can patch together. They bounce from one bit of piecework to another, into the agency business and out again, carrying fresh gossip as they go. The result is that most people who work in Canadian publishing “know” far too much about their colleagues.

They know these things because most of them live and work in Toronto, go to the same parties, restaurants, bars, coffee shops. They fall in love with each other, marry, fall out of love, whisper about who is sleeping with, or has slept with, whom. They fight, schmooze, hire, fire, and point fingers at this one’s failure or that one’s surely undeserved success. They can be kind, yet prone to snobbery, which is usually defined as taste. They can be vain, yet appear as humble as an old shoe, especially when accepting an award on behalf of an author unable to attend a ceremony. They can be helpful and cooperative and considerate of each others’ feelings, yet wily and competitive. Some are Canadian-born persons who have spent their professional lives producing the best Canadian books possible though they work for foreign-owned entities. Some are foreign-­born persons who have spent their professional lives producing the best Canadian books possible for Canadian-owned companies. In other words, there are no villains here.

Some Canadian publishers say that Canadian book publishing is a glamour business. There are certainly a lot of parties, literary festivals, prize brunches, lunches, and galas that publishing people attend, if that’s what glamour means. Some of these events are sufficiently well publicized that Important People like Hilary Weston and a Big Bank have bought naming rights. Consider that annual televised unreality show, the Scotiabank Giller Prize. Publishers who have brought forth nominated books get invitations. And they go, dressed in their best. They are seated at tables peopled with real celebrities and “people of influence” who are invited to attend the show in order to drag the public’s attention toward Canadian writing. Nominated writers, on the other hand, have been known to appear at the Giller like so many Cinderellas in rented or borrowed finery. In 2013, some Canadian publishing people—Avie Bennett for one—got to attend a Nobel Prize ball, thanks to Alice Munro’s Nobel Prize, though McClelland & Stewart, the company that published a lot of her work in Canada, had by then become just another imprint owned by Bertelsmann SE & Co. KGaA.

This brings me to another fact about Canadian book publishing that should be better known. The industry’s operating revenues amounted to about $1.7 billion in 2014, way down from over $2.1 billion in 2006. Are you surprised to learn that only about seven percent of those revenues were paid out to writers as royalties?

No writer will be. The average annual gross income for writers in Canada in 2015 was a munificent $12,879, which was 27 percent lower than their average income in 1998 (after taking inflation into account). It was $36,000 below the average income earned by Canadians in general. Female writers (the majority) made only 55 percent of what male writers earned. A similar pattern of decline in revenues and increase in the poverty of writers is evident in the US and the UK.

I tell you these things so you will understand something of the world that Avie Bennett bought into when he purchased M&S in 1986, and which he washed his hands of fifteen years later.

Every public policy, like every person, has a history. Major public policies are usually born in the sunshine of a fresh political morning, the brainchildren of brand new governments. Such policies eventually die in the darkness of what former British Prime Minister Harold Macmillan is said to have called “events, dear boy, events.” The birth of Canada’s nationalist publishing policy was different. It was not a new government’s splendid baby: it was in fact birthed by events, “on the fly,” as one writer put it, a small part of the various policy responses to the dangerous events and electoral requirements of the early 1970s.

It was basically an add-on to a larger strategy devised by federalists shaken by the rise of radical separatism in Quebec. Small nationalist policies were offered to English-speaking Canadians as vaccinations against a more serious political infection.

By the late 1960s, nationalist ideas had become very attractive to the English-speaking boomer generation. English-speaking boomers (yes, I am one) were well-educated, ambitious, and utterly disdainful of the fear of ethnic nationalism and political radicalism ground into our parents by the Great Depression and World War II. We were both fascinated and repelled by the separatists in Quebec: repelled because they wanted to leave us, yet fascinated because their anti-colonialist ideas resonated.

When I was growing up, English-Canadian magazines and newspapers constantly posed this question to their readers: what is the Canadian identity? Is a Canadian just a Briton without the class antagonism? Is a Canadian an American without the right to pursue happiness? French-speaking Quebecers knew who they were because they remembered themselves en Français, which made them marvellously distinct in a sea of les maudits Anglais. English-speaking Canadians shared a language with the Americans, the British, and the entire Commonwealth. With the exception of First Nations, we were immigrants or the descendants of immigrants. What cultural touchstones were ours alone? We remembered next to nothing about ourselves because hardly anybody wrote about us. The Americans next door, along with our former masters, the British, treated the Canadian book market as an extension of their domestic ones. Our textbooks and trade books were mainly written abroad. Our scholars and authors usually had to find a foreign-owned publisher if they wanted to get their ideas into the world. Pierre Berton’s first book was published by a foreign-owned publisher: the same was true for Farley Mowat and W.O. Mitchell.

In 1971, one year to the day after the FLQ Manifesto was read out on the CBC during the height of the October Crisis, Prime Minister Pierre Trudeau rose in the House to issue a counter manifesto. Instead of Canada as a nation founded by the English and the French alone, Trudeau proposed an image of Canada much closer to the truth, a wonderful mosaic made up of people from the four corners of the earth. Our multiplicity of ethnic identities would become Canada’s real identity, he argued, with no one group representing Canada. Instead of the US melting pot model, we would encourage Canadians to keep hold of their ethnic differences, all of which would have equal value.

This multiculturalism policy, as it was called, followed major changes in immigration rules which had opened Canada’s doors to anyone with the right qualifications, regardless of country of origin, regardless of ethnicity and race. The leader of the official opposition and the leader of the NDP rose to support Trudeau. Everyone seemed to grasp the need to promote a diverse society over one based on French versus English identities. This determination grew more urgent after the Parti Québécois swept to power in Quebec in 1976. A referendum on the break-up of the country loomed. The idea of diversity as the central fact of Canadian culture would either hold the country together or drive it apart, no one really knew.

One thing everyone did know is that no one could create an identity out of a multiplicity of identities just by making a speech in the House. After the Massey-Lévesque Royal Commission of 1949 to 1951 on arts, letters, and sciences in Canada, policy makers in Ottawa had come to believe that English Canada’s curious lack of identity was due to the absence of cultural mirrors. How could Canadians know themselves if they so rarely saw themselves reflected in stories, books, movies, songs, or television shows, went the argument? And how could we see ourselves reflected if our cultural artifacts were made elsewhere for other markets?

The CBC and the National Film Board had both been created with mandates to generate national conversations (in the case of the film board to make wartime propaganda films) so as to protect Canadian airwaves and film screens from an American cultural onslaught. Book publishing was different: Canadian publishing had been established early in the life of the country, yet by the time of the Massey-Lévesque Commission, Canadian publishing had fallen on hard times. While the publishing trade in Quebec grew rapidly during World War II, in English Canada publishers did poorly with Canadian authors. They relied instead on selling works originated elsewhere, and on educational publishing in which the number of buyers was guaranteed by provincial contracts. Vincent Massey pointed out that the output of Canadian books had plummeted from that high point in 1930: in 1948, only 14 novels and 35 works of poetry and drama were published in English Canada by Canadian companies.

The Massey-Lévesque report led to the creation of the Canada Council in 1957 and the National Library of Canada. (The Commission found that more Canadian books could be found in the US Library of Congress and in other American libraries than in Canada.) But getting more English-Canadian companies to publish Canadian authors remained the hard problem. A state-owned book publishing company smacked of something the Soviets would do. The Canada Council only issued its first grants to publishers in 1972.

Every trade book is a risky, stand-alone offering. Well-known and successful authors produce books that fail, and in a market as small as Canada’s, even a big success may fail to defray the costs of production, marketing, and distribution. The problem was complex: how could Canadian-owned publishers compete with the foreign-owned publishers already active in Canada yet centred in much larger markets? The foreign-owned companies could amortize their costs over much larger sales in their much larger home markets. Foreign-owned trade publishers (as opposed to academic or educational publishers) active in Canada had no incentive to publish Canadian authors writing on Canadian subjects. How many US readers would want to buy a biography of Sir John A. Macdonald? Why would a British reader want a coming of age novel set in rural Saskatchewan? That’s why book traffic moved in one direction only, from a foreign source to Canadian readers.

Canadian storytellers needed Canadian publishers willing to take the risks necessary to find Canadian audiences. But Canadian publishers could only make a go of it by acting as Canadian agents for foreign publishers, or by printing textbooks ordered by provincial education departments.

It took the canniest and most determined of Canadian trade publishers, Jack McClelland, the owner of M&S, to ignore most of these realities, put aside the profitable educational publishing business, and concentrate instead on finding and marketing Canadian authors of fiction and non-fiction. By the early 1960s, M&S was the leading publisher of Canadian works, but every year was a struggle.

In 1971, McClelland realized that if he wanted his company to survive, he had to attract serious support from governments. At that point, there were no grants offered to publishers by any level of government. McClelland & Stewart was in trouble: it was carrying too much debt, a hangover from doing too many books for the centennial year, 1967, and McClelland’s refusal of the offer of a cash infusion from the Bronfman investment vehicle, CEMP, and the McConnell family’s Starlaw. The deal they’d offered would have required McClelland to give up control. Later, they’d backed an M&S bank loan for close to $1 million with the Toronto-Dominion Bank. He was having trouble paying it back.

He picked the time to make his pitch for help with great skill. John Robarts, the handsome, fiery, and innovative premier of Ontario, had been replaced as leader of the Progressive Conservative government by former education minister, Bill Davis. In 1970, Davis had set up a Royal Commission on book publishing due to concerns about foreign textbooks flooding Canadian schools and the sale of the original Canadian publisher, Ryerson Press, and Gage, to foreign interests. Just as those hearings began, in February 1971, Jack McClelland announced that he hadn’t made any inroads on what had become a $2 million debt. He said he needed immediate investment to the tune of about $1.5 million or he would have to consider selling out—to foreign interests.

McClelland was also a founding co-chairperson of the brand new Committee for an Independent Canada. He’d been recruited to the nationalist cause, along with Quebec publisher Claude Ryan, in 1970 by M&S author and Maclean’s Editor Peter C. Newman, economist Abe Rotstein, and former Liberal finance minister Walter Gordon. They were joined later by the Edmonton-based bookseller/publisher Mel Hurtig and many others. The group had garnered 170,000 names on a petition, which they sent to Prime Minister Trudeau asking the government to curtail foreign investment in Canada.

Given the popularity of this new nationalism, those guiding the provincial government’s re-election campaign decided that M&S couldn’t be allowed to fail. Only one month after McClelland made his announcement, the commissioners issued an interim report. They recommended that the Davis government should back a $962,000 ten- year debenture issue by M&S that would accrue no interest for five years and be convertible to shares, in order to keep M&S afloat. The Commissioners described the M&S publishing program as “a national asset worthy of all reasonable public encouragement and support.”

The Davis government accepted this recommendation. As Roy MacSkimming put it in his fascinating history of modern Canadian publishing, The Perilous Trade, this ushered in a new era in Canadian public policy. Book publishing would no longer be regarded as a business like any other; it was a key cultural industry, producing what economists call “merit goods,” things of intrinsic value to society that must not be abandoned to the mercies of the market. By throwing himself on the public’s mercy, McClelland had judged the political mood with uncanny accuracy.

Davis’s Progressive Conservatives won the election. In 1972, both the Canada Council and the Ontario government began to offer grants to Canadian publishers. By late 1973, economic nationalists were gaining the upper hand in Ottawa. In December of that year, the federal Liberal government, with the insistence of the NDP, threw a big nationalist bone to an angry (and fearful) electorate. It passed a law to create a government agency called FIRA—the Foreign Investment Review Agency.

FIRA was granted the power to screen all proposed acquisitions of control of Canadian companies by foreign entities. Though FIRA was aimed mainly at manufacturing and resource companies, Canadian-owned publishers were also protected by it. From 1974 forward, no Canadian-owned book or periodical publisher, or distributor, could sell control of itself to foreigners without permission from the Minister of Industry who could refuse to allow the transaction, or extract in exchange for that permission a significant benefit for Canada. Even indirect acquisitions of the Canadian subsidiaries of foreign-owned publishers were soon regulated by FIRA.

A decade later, the conservatives came to power in a landslide, led by Brian Mulroney, the boy from Baie-Comeau, Quebec. He had vowed to offer a friendlier attitude toward foreign investors, especially Americans. The Foreign Investment Review Act and its agency were quickly renamed as their aims changed from holding off foreign ownership to encouraging it. Under the new Investment Canada Act, the Minister of Industry became responsible for making sure that certain new investments in Canada by foreign entities, or any shuffling of the ownership of foreign-owned Canadian subsidiaries, resulted in good things for Canada.

But Mulroney was never so politically insensitive as to throw open the doors to foreign investment in cultural businesses. Foreign ownership of designated cultural industries remained off limits under the new Investment Canada Act, unless certain exceptional circumstances prevailed. These rules applied to the entire publishing system, including the publication, distribution, and sale of books, magazines, and newspapers.

The Investment Canada Act became law as the Free Trade Agreement with the US was being thrashed out in Washington’s back rooms. The country was split on the virtues of the deal that Mulroney signed in his first term: the nationalists wanted no part of it, while continentalists were convinced it would make Canada wealthier. The agreement had to be ratified by both parliament and the US Senate. So, in a bid for political support, well before the election of 1988, a new and even tougher nationalist cultural policy was announced. It was named after Progressive Conservative Prime Minister Brian Mulroney’s hometown—Baie-Comeau, Quebec. It was the brainchild of communications minister Marcel Masse, a Quebecer who took it as a given that any nation must have its own cultural life. Under this Baie-Comeau policy, 51 percent of the shares of any foreign-owned publishing subsidiary in Canada acquired indirectly by another foreign entity had to be sold off to a Canadian entity within two years.

The policy was politically astute: it defanged the arguments of the noisy and influential cultural community which worried that Canada’s cultural gains, so painfully achieved under the FIRA and the Investment Canada Act, along with federal and provincial grants, would be swept away by an Agreement aimed at getting rid of protectionist practices, tariffs, and taxes.

The Baie-Comeau policy proved to be politically effective. Mulroney won the 1988 free trade election defeating the Liberals, led by John Turner. The Free Trade Agreement was duly ratified. So was the North American Free Trade Agreement, followed by a series of other free trade deals including the most recent one with the European Union. In all these deals, Canadian cultural industries were allegedly, or at least publicly, kept off the negotiating table. Because: Canadian control of Canadian culture had proven to be the third rail of Canadian politics. No government could be seen to reduce that control without feeling the burn.

The Baie-Comeau policy and the Investment Canada Act made it clear that Canadian culture would not be used as a bargaining chip in trade deals because Canadian culture is vital to national sovereignty in a way that softwood lumber could never be.

All iterations of this nationalist policy were rooted in the notion that Massey-Lévesque had gotten it right, that Canadians could only develop a national identity if we could see ourselves reflected (in all our splendid ethnic diversity) in books, newspapers, and magazines, on television and radio, in song, and on the stage. No such reflections would result if we had no means to help our artists find audiences or laws to prevent the Americans and the British and the French from flooding us with their offerings and buying up all our talent.

Canada’s evolving nationalist cultural policy embodied the belief that a country is built from words, images, and sounds, as much as from bricks, lumber, and steel, and that a shared culture is essential to national survival. Perhaps most important, this nationalist policy embodied the public will: there would have been no nationalist ownership rules if Canadian politicians hadn’t believed that their political lives and agendas depended on them.

And so, Canadian book publishers became contractors building Canada. They became recipients of hundreds of millions of dollars in grants and tax credits administered with close attention by civil servants tasked with making the policy and the law work. The Canadian book publishing industry expanded its offerings from the miserable 14 novels and 35 works of poetry and drama produced in 1951. In 2014, according to Statistics Canada, Canadians produced 10,433 new titles. That’s a lot of mirrors.

Why the emphasis on publishers (and producers of film, TV, and recordings), instead of on the artists who create those reflections?

Because, even as late as 1998 most Canadians did not have home computers, and hardly anyone grasped that a global network called the Internet would soon connect everyone to everyone else across almost all national boundaries. Few policy makers foresaw that this Internet would become a global territory where works of the imagination would be displayed, sold, or offered for free. Few (Avie Bennett was one of the few) understood that such a network would change all the rules of the cultural game, especially the boundary rules.

Even as late as 2008, writers, filmmakers, and musicians still could not get their creations in front of audiences by themselves: they had to sell rights to publishers, producers, and record companies willing to invest in them and bring their works to market. In spite of the rise of the blog, the availability of an endless array of online publishing formats, the success of Amazon, etc., the development of YouTube, Instagram, the whole Silicon Valley oeuvre, most professionals working in the book business still believe that unless the taxpayer bankrolls Canadian publishing companies, Canadian writers will be like so many fish out of water, gasping out their stories in quiet rooms, unheard.

And because of that, though Mulroney’s Investment Canada Act has been amended over the years since the Baie-Comeau policy was announced, it has not fundamentally changed. In the last throes of the Mulroney government’s political life, a new book policy was announced that was a lot like the old book policy. Liberal Prime Minister Jean Chrétien transferred responsibility for screening foreign takeovers in the cultural sector to the Minister of Canadian Heritage in 1999. The Conservative Stephen Harper government made a few changes to the Investment Canada Act: the federal government still reviews offers to purchase Canadian companies, but only if those companies have asset values greater than specific thresholds. These value-based and national security reviews were introduced after Chinese state-owned entities made one offer too many for vital oil sands projects. When it comes to cultural industries, especially publishing, the threshold value which kicks off a review is very low. In other words, the act and the policy still exist and still purport to protect publishing, and other cultural industries, from foreign ownership.

Yet on Canada Day 2000, without public explanation or debate, Canada’s nationalist publishing policy—dubbed the “Book Policy” in 1992—was actually stabbed in the heart. That was the day that the U of T received the gift of 75 percent of McClelland & Stewart’s shares while Random House acquired 25 percent, along with other more significant benefits. This transaction was the first step in the movement of control of M&S to a foreign owner. It was permitted by the very public servants who were supposed to make sure that control of Canadian publishing companies remained in Canadian hands.

The knife had been inserted this way: the Liberal government’s Minister of Canadian Heritage, Sheila Copps, signed a letter of opinion that resulted in Random House of Canada agreeing to buy 25 percent of M&S’s shares. The gift would not have been made without that sale, and Random House would not have bought those shares without that letter of opinion. The opinion asserted that the Minister would still consider M&S to be a Canadian company after this transaction took place, and that her successors would be bound by that opinion too, unless the facts presented to the government to get the opinion changed in a material way. The issuance of this letter led predictably to M&S’s absorption into the global Bertelsmann publishing empire. Any senior civil servant who read the proposed contracts submitted for review by Avie Bennett’s lawyers would have understood that if these transactions went through, M&S’s transformation into another imprint in the Bertelsmann stable would be inevitable.

Yet at the press conference held to announce the transaction, Bennett was praised repeatedly for his philanthropy and his foresight in giving control of M&S to U of T to hold for all Canadians. There were two rounds of applause to salute his “astonishing generosity.” University of Toronto president Robert Prichard declared, in a university-issued press release/story, his admiration for Bennett’s “extraordinary commitment to the future of Canadian literature, one that utilizes the University as a trustee to perpetuate McClelland & Stewart’s long-standing contribution to Canadian arts and culture.” Margaret Atwood wrote a letter of praise. Michael Ondaatje described the gift as “remarkable.” Three years later, this transaction was cited by the governor general, Adrienne Clarkson, when she elevated Bennett to the highest office in the Order of Canada—Companion.

Since M&S had been the sine qua non for Canada’s nationalist publishing policy, and even styled itself as “The Canadian Publishers,” when U of T was permitted to sell its M&S shares to Random House of Canada in 2011, it marked that policy’s last breath. The proof? Two years later, Stephen Harper’s Minister of Canadian Heritage and Official Languages, Shelly Glover, approved Torstar’s sale of Harlequin Books to Rupert Murdoch’s HarperCollins LLC for $455 million. The Investment Canada Act provisions permitting such a sale were not met. And no one blinked.

Adapted from The Handover by Elaine Dewar. Copyright © @2017  All rights reserved. Published by Biblioasis. biblioasis.com

Elaine Dewar is the bestselling author of Bones: Discovering the First Americans. She has won nine National Magazine awards, including the President’s Medal, as well as the Writers' Trust Award for Non-Fiction for The Second Tree: Of Clones, Chimeras, and Quests for Immortality. She lives in Toronto.

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