Canada tries to trim big newspaper chains down to size

The Canadian government is sticking its nose into the newspaper business. Ottawa says it wants to stop the big chains from controlling the news in Canada. Publishers and opposition politicians say the government's proposals could endanger freedom of the press.

The Daily Newspaper Act is the name of the proposed legislation, and it takes direct aim at the two largest newspaper chains in Canada, Southam Inc. and Thomson Newspapers Ltd. Some of its provisions are tailor-made to stop the two firms from growing any further.

Under the act, Southam and Thomson newspapers would not be allowed to grow by buying existing dailies, starting new ones, or changing weeklies and monthlies into daily newspapers. And if either of the two chains is sold, it must be broken up. They do not have to sell any of their assets now.

Southam has about 27.6 percent of Canada's daily newspaper market. Thomson Newspapers has about 21 percent. Ironically, the largest daily newspapers in English- and French-speaking Canada are not controlled by chains. The Toronto Star is owned by Torstar, a public company, and La Presse is owned by Montreal financier Paul Desmarais.

The newspaper legislation will not affect the owners of those two papers - at least not right away. But this did not stop the Toronto Star from attacking the legislation in an editorial entitled ''Flawed Newspaper Bill.''

''This is a field into which no government ought to tread,'' said the Star, which generally supports the policies of Prime Minister Pierre Trudeau's Liberal government.

It is not just the ownership issue that has publishers up in arms. The Daily Newspaper Act would ensure that no other chain or group ever controlled more than 20 percent of daily newspaper circulation in Canada.

It would also set up a Canadian daily newspaper advisory council, in effect a national press council, to sit in judgment on articles that appear in newspapers.

There is already a controversy over who should sit on this council. The man in charge of the bill is the federal minister of state for multiculturalism, Jim Fleming. He would like to see journalists and others sit on such a council. And he wants it financed by government money, up to $20 million, so that it is independent of publishers.

That begs the question of how the council will be independent of government. There are also criticisms that journalists should not be judging their own work or that of their colleagues.

Mr. Fleming worked as a reporter at a local television station in Toronto before entering politics. He has been eager to bring the press barons under control.

''You can't have a free press if too much is owned by too few,'' he said when unveiling his legislation.

The government campaign against the big newspaper chains started in earnest in 1980. At that time Southam and Thomson Newspapers each closed one newspaper in a city where the other had a competing paper - Southam closed the Winnipeg Tribune, and Thomson dropped the Ottawa Journal. The result was that each gained a monopoly in one market. The government called an inquiry, and its recommendations form the basis of the proposed law.

Publishers have called the bill ''very dangerous and undesirable.'' They threaten to fight the proposal if it becomes law, resorting to Canada's new Charter of Rights, especially the section dealing with the free press.

The Conservative news media critic Perrin Beatty described the bill as ''odious, dangerous, and possibly illegal.'' He added that if the government were worried about the concentration of ownership in the newspaper business, all it had to do was amend the Combine Act, Canada's antitrust law, so it could deal with newspapers more effectively. He criticized the bill for not allowing the chains to start new papers or convert weeklies to dailies.

''Those provisions could prevent competition from growing up in single newspaper markets,'' he argued.

Other provisions of the Daily Newspaper Act are that ''nonmedia'' companies that want to buy newspapers would have to prove that they would run the papers independently of their other operations. Critics say this allows the government to decide who may buy or start a daily newspaper.

Another section has the government financing foreign and regional bureaus up to the tune of $150,000. This could mean the government decides which spots are worthy of a bureau. Publishers say they won't accept a penny.

The bill comes before Parliament in September. The Liberals have a majority in Parliament, and unless there is a bitter battle by the opposition Conservatives, it will be law by the end of this year.

Then the legal wars start as publishers test the mettle of Canada's new Charter of Rights.