Transcontinental Boosts Stature With CanWest Buy

By: Jim Rosenberg Canada's fourth-largest print media group and biggest consumer magazine publisher is making a major expansion of its newspaper holdings.

In what it says will be its largest transaction to date, Montreal-based Transcontinental Group announced this week that it expects to close next month on the purchase of 10 dailies, two weeklies, 32 related publications, and two commercial printing plants from CanWest Global Communications for US$168 million.

CanWest, owner of broadcast operations and the Southam newspaper group, will use the proceeds to pay off debt. Subject to regulatory approval, the sale of dailies in Newfoundland, Nova Scotia, Prince Edward Island, and Saskatchewan, and weeklies in New Brunswick and Saskatchewan brings the holdings of Transcontinental Media to 79 community newspapers in eight provinces, along with 83 related publications, making the US$328 million-a-year publishing and distribution subsidiary the country's second-largest community newspaper group. The dailies are its first.

In acquiring related printing operations, Transcontinental becomes the printer of CanWest's National Post for the Atlantic provinces. It already prints in Vancouver the business daily's copies for Western Canada and has printed for several years The Globe and Mail, the Post's long-established competitor.

With combined annual revenues of approximately US$65.76 million, the papers' annual pretax cash operating profits came to US$19.4 million, according to CanWest. Transcontinental chairman and CEO Remi Marcoux said the acquisition will immediately be accretive to earnings. "Community newspaper publishing in Canada is one of the niches that we promised our shareholders we would develop through acquisition," Marcoux said.

Most of the titles originated with the old Thomson and Hollinger (Unimedia/Sterling) groups. Transcontinental last year acquired all but one of Unimedia's Quebec weeklies from Gesca soon after that Power Corp. of Canada subsidiary acquired Unimedia's dailies there. (Gesca retained the weekly in Saguenay, where it publishes a daily.)

Within hours of announcing the CanWest deal, Transcontinental said it completed the purchase of several newspaper and commercial printing operations from Gesca, for which it is building a production plant where it will print Gesca's La Presse, in Montreal.

At The Western Star, Corner Brook, Newfoundland, Managing Editor Richard Williams said the staff's mood seemed good since the announcement, and that some employees who had worked for Transcontinental on the mainland "seem to be very positive about it."

"Nobody necessarily wants to be sold," said Gary J. MacDougall, managing editor at The Guardian, Charlottetown, Prince Edward Island. But it was no secret his paper and others were on the block, so the staff there showed no surprise and some relief.

"We've gone through quite a few sales in the last few years," recalled News Editor Iris Philips. She explained that while there was "a fair amount of anxiety" when her paper was first sold by Thomson, its staff has a more-positive business-as-usual attitude this time.

Besides appearing to be "solid" and "fiscally sound," MacDougall said Transcontinental seems to value particular newspapers rather than see them as parts of a group or national purchase. "It's nice to know that -- that you're wanted," said Mac Dougall.

Williams said he and a reporter were invited to interview Tanscontinental Media President Andre Prefontaine yesterday during his visit with Publisher Robert Verge.

A newspaperman with a news-side background, Prefontaine in the 1990s moved from editor of Ottawa's Le Droit in northeastern Ontario (where he oversaw early adoption of pagination while the paper's printing was outsourced), to publisher of the Windsor Star in southwestern Ontario (when that paper became the first in North America to rely entirely on a color keyless offset press), to president of Transcontinental Media.

"We look forward to working with someone who has experience in the newsroom and the editorial department," said Williams, whose counterpart in Charlottetown expressed similar sentiments to E&P.

Current owner CanWest, primarily a broadcaster, with interests stretching from New Zealand to Ireland, had instituted weekly national editorials, which ran at 14 of its dailies. The Guardian reported Prefontaine saying Transcontinental's long-standing policy alllows local papers rather than corporate executives to set news agendas.

And whereas CanWest sought to join its news operations, putting cameras in dailies' newsrooms, Prefontaine joked to a Guardian reporter, "We don't like cameras."

Reporter Ron Ryder quoted Prefontaine as saying, "Our idea of convergence is ventures that use the strengths of our media, our printing and our distribution businesses."

Prefontaine said Atlantic Canadian papers present an opportunity to increase Transcontinental's advertising and flyer distribution. He told Ryder: "When we can coordinate our network of newspapers in Quebec with the properties that we have acquired in the Atlantic provinces they leave us in a very strong position in eastern Canada."