Postmedia purchase of Sun Media papers could leave company owning three dailies in Vancouver
The big business story of the day in Canada is a major media deal involving two of the giants of the newspaper world.
The owner of the Vancouver Sun and Province, Postmedia Network Canada Corp., announced that it's paying $316 million in cash for Quebecor's 175 English-language Sun Media newspapers, its English-language digital entities, an Ontario printing plant, and 34 real-estate properties in Ontario, Alberta, and Manitoba.
Postmedia president and CEO Paul Godfrey said in a conference call with analysts that the deal will help his company "survive and compete" against large foreign-based digital operators, such as Google and Facebook.
"Adding Sun Media publications to the Postmedia network will create a stronger Canadian-managed company with a digital scale required to compete more effectively and potentially regain some of the share of the advertising space that's been lost to the technology-driven giants to the south," Godfrey said.
He noted that the price is actually $306 million because it includes a $10-million adjustment, which is mostly related to real-estate properties that will be sold by Sun Media prior to closing.
The Sun chain includes not only the daily Sun tabloids in Calgary, Edmonton, Winnipeg, Ottawa, and Toronto, but also the London Free Press and the 24 hours daily papers in Vancouver and Toronto. Sun Media also owns 140 weekly community papers and specialty publications.
In addition to the Vancouver Sun and Province, Postmedia owns eight other daily papers in Canada, including the National Post, the Gazette in Montreal, Ottawa Citizen, Calgary Herald, and Edmonton Journal.
The deal is subject to regulatory approval from the Competition Bureau.
If the transaction goes through, it will leave Postmedia as the owner of three daily papers in Vancouver. The company no longer owns any local community papers after selling them to Glacier Media in 2011.
In its last fiscal year, Postmedia posted a loss of $160.2 million on revenues of $751.6 million. It lost $20.6 million in the first-quarter of 2014 on revenues of $171 million.
At the end of the first quarter, it had total assets of $818 million and total liabilities of $741 million, including $472.2 million in long-term debt. More than half of the long-term debt, $284.1 million, was in 12.5-percent senior secured notes denominated in U.S. dollars.
"The transaction will be a deleveraging event that will improve Postmedia's capital structure and reduce our combined net leverage ratio from 3.8 times to 2.9 times and inject it with new equity," Godfrey noted. "There is also further potential for deleveraging through monetization of Sun Media's real estate portfolio. The acquisition will provide significant incremental free cash flow and improve the financial strength of this combined entity."
Oct 6, 2014 at 12:06pm
What's your take on this?
Oct 6, 2014 at 12:29pm
More consolidation of the corporate media? Just what we need!
Oct 6, 2014 at 1:02pm
The deal is subject to regulatory approval from the Competition Bureau. What a joke that is!
Oct 6, 2014 at 3:11pm
Why would Godfrey's failing corporation, which has been bleeding millions of dollars and hundreds of jobs, be allowed to further extend its reach of monopolization? Recall that Godfrey just purchased the failing CanWest Global's newspapers and immediately set to destroying them further. This is a shameful situation which only further impoverishes Canadian newspapers and their readers. In 1990, just 17.5% of Canadian dailies were independently owned. Today it is less than 1%.
Oct 6, 2014 at 5:53pm
PM didn't use it's resources to try and buy back the community newspapers from Glacier, who have been shopping them around and had no takers. Black Press just bought some small weeklies in Washington State and two others in Hawaii but it looks like Black will remain a small player in the big game.
Oct 6, 2014 at 5:59pm
It would appear that resource extractors are prepared to sacrifice 100s of millions in order to completely subvert democracy with an iron grip on our mass media. When you have a self proclaimed journalist like Peter Mansbridge in thrall to the oil & gas industry, and you have Harper trying to undermine the CBC, then what kind of democracy does that leave us? The deficit, with this move, is staggering. We've become a thoroughly corrupt petro state where our constitution, environmental laws and First Nations land rights are being replaced by thinly disguised fascist edicts from the PMO. FIPPA is proof of that. It's now up to the Supreme Court of Canada to save our democracy until we can boot these criminals out of office.
Oct 6, 2014 at 7:11pm
This is a supreme effort to draw the incredibly profitable flyer business away from non-subscription free newspapers which are little more than wrap around the flyers and rarely offer any kind of journalism other than fluff features. It might work. Unfortunately, the Postmedia and Sun Newspapers chains don’t offer much serious journalism either. A pox on all their camps.
Oct 6, 2014 at 9:42pm
Media democracy days' upcoming event has a panel called "The Big Media Cartel: Journalism’s decline in a managed democracy" featuring Robert McChesney via video - couldn't be more relevant. http://2014.mediademocracydays.ca/