Postmedia to buy Sun Media’s English papers/websites for $316 million (if the Competition Bureau agrees)

I just woke up, and I’m still not sure I’m entirely conscious because I’m seeing that Postmedia (my employer) is buying Sun Media’s English newspapers — a total of 175 of them — and digital assets like for $316 million. (Postmedia press release, Quebecor press release)

The transaction would have to go through the Competition Bureau, which quickly issued a statement saying it will examine the transaction (as it would for any transaction of this type).

The transaction includes the big Sun papers in Toronto, Ottawa, Winnipeg, Calgary and Edmonton, plus the 24 Hours papers in Toronto and Vancouver, the London Free Press, and a lot of community newspapers.

The transaction does not include the Journal de Montréal or any other French-language papers. It also does not appear to include the Sun News Network, which will make for an interesting situation there because of how that network and the Sun are tied together.

This deal follows another in which Quebecor sold its Quebec community newspapers to Transcontinental for $75 million. Both appear to be a way to shed legacy assets and build up cash to strengthen Quebecor’s position as a telecom company and potential national wireless player.

The Competition Bureau also reviewed the Transcontinental transaction and concluded that, where competing papers were acquired, an offer to sell one had to be made. That eventually led to the sale of 14 of them.

If I had to guess, I’d say this situation would be similar. The Bureau probably won’t allow the two major paid dailies in cities like Ottawa, Calgary and Edmonton to be owned by the same company, and would force Postmedia to sell them (or their existing broadsheets). Similarly for areas where both have community papers. And in Vancouver, where it would own three of four papers, and Toronto, where it would own three of six, it might be forced to make sales there too.

And breaking up the Sun chain sounds like it would be a disaster. Those newspapers share a lot of resources, not to mention branding. So it’s hard to see the Ottawa/Toronto/Winnipeg/Calgary/Edmonton Sun not ending up with the same owner.

We’ll see how it works out. The Transcontinental/Quebecor deal took almost a year to work through the system, and I suspect it will probably be next summer before we know who owns what as a result of this.

The $316-million value is about 1/5 of what Quebecor paid for Sun Media ($989 million in 1999) and Osprey Media ($576 million in 2007) to acquire those newspapers, though subsequent moves means there are some adjustments to that comparison.

10 thoughts on “Postmedia to buy Sun Media’s English papers/websites for $316 million (if the Competition Bureau agrees)

  1. CraigMc

    I’m really curious to see how this all shakes out vis-a-vis Sun TV. If, as speculated here, they aren’t part of the deal, how could they logically maintain the same name as the newspaper chain they are no longer part of? If they are part of the deal, then what happens to them given the controversy they’ve stirred up of late with Levant? Would Postmedia want to be affiliated with these yahoos?

  2. Dilbert

    It’s clear that TC wants out, and wants out bad. Selling off for such a huge loss seems like a real indication of what they feel that market is worth in the long run.

    it does bring up a bunch of stupid questions though. One of the biggest is the question of “Sun Media” as the TV news channel, when it’s no longer part of the company holding the Sun newspapers. It seems that one or the other (or both) may also be heading for a serious rebranding. Quebecor News?

    As you mentioned, the issue of media concentration is just too big to ignore here. I can imagine plenty of kickback on this one not only from the public but also from the politicians. There are a lot of reasons to be worried because it’s not like Postmedia is in a great position itself. This looks much more like one of those “grouping together before massive consolidation” scenarios.

    At least at first glance, it would seem unlikely that the competition bureau would let this one go through as is. However, I can see both Postmedia and Quebecor making the (very real) argument that both have been losing money running against each other, and without consolidation, there would be a closure by one or the other in each of those markets eventually. Nobody is making money at this right now, so perhaps Postmedia feels that they can consolidate things enough with common ownership to make it work out.

    No matter what, it almost certainly means a bloodbath for staff. Postmedia isn’t going to want to own more money losing papers, and will likely apply their usual magic to try to make it work out. That means everything from centralization of services (such as national news, page layouts, and so on) to potentially outsourcing printing (as they have done in Montreal). Perhaps they see the real value in the deal as the physical properties invovled, that they think they can liquidate and break even on.

    No matter what, this deal looks bad for the newspaper industry in Canada. Consolidation of almost all of the major papers into a single company is the last step before the end.

    1. Fagstein Post author

      It’s clear that TC wants out, and wants out bad.

      I assume you mean Quebecor. And I think this is more about raising money for telecom purposes than it is wanting to abandon print media.

      That means everything from centralization of services (such as national news, page layouts, and so on) to potentially outsourcing printing (as they have done in Montreal).

      As I understand it, both chains already do this.

      1. Dilbert

        Sorry, typo time… I was going to type PKP, but I guess a member of the national assembly shouldn’t be running the major media company that reports on it. :)

        In any deal like this, there has to be some synergy and some benefit for the company buying. Similar to the Bell Astral deal, it only really worked out for Bell if they could remove enough staff and enough real estate leases / ownership by merging operations and centralizing as much as possible. It means that CJAD no longer has a sports department at all, and instead all the sports comes from the existing crew at TSN. The back office layoffs were apparently even more serious, all in line with trying to make things work out. The goal of course is to end up with something not only more profitable in the long run, but also to make siginficant short term gains to offset the costs of the purchase.

        Since it’s doubtful that the competition bureau would let this deal stand as is, you have to ask where it goes. There aren’t a whole ton of buyers for a newspaper chain these days, it’s a bit of a buggy whip business at this point. So while the logical thing to do would be to keep the Sun newspapers together as a group, it’s unlikely anyone will show up willing to spend on them. So it may means as an example some of the papers changing names or looks as they are taking on by other owners.

        Now a real alternate view of the universe could be a variation on the multiple media concepts Postmedia has been aiming at. Could you imagine the Sun newspapers moved online only as a the “online face” of postmedia, or the other way around, with their existing brands moving to online only and the Sun papers being the leaders? Do you think Montreal is ready for the Montreal Sun? ;)

        I would say that the large number of regional and local papers are likely the ones to get hit the worst. If any of them are marginal or losing money, it’s likely they get put up for sale and then closed when no buyers appear.

        The competition bureau could also say no across the board, fearing the merger would leave most Canadians with few if any real options in local and regional news, choosing only between The National Post, Globe and Mail, and Post Media regional papers. Considering none of the papers is particularly turning out huge reported profits, it would seem likely that the globe or the post could disappear one day as well.

        I guess perhaps this is just how the end game plays out.

  3. Dorothy

    What difference, really, does any of this make?
    Newspapers don’t employ ‘reporters’ any more but journalists; (spare me). Editors want story-tellers, not news hounds with sharp instincts, curious minds and shoe leather to burn.
    Everyone is now an instant writer, and with the self-absorbed universe we live in, everyone’s story is supposedly worth my time in print, especially if it can be had for nothing.
    Wrong. It’s no coincidence Drudge is the one, and only, go-to site for news. A public that wants to be informed wants news, the kind it takes time and effort to dig up and out.
    A media outlet can provide content on numerous platforms, but content is first and last what makes or breaks a paying customer.

    1. Fagstein Post author

      It’s no coincidence Drudge is the one, and only, go-to site for news.

      Does that mean you never click on the links on the Drudge site? The ones that link to other sources of news?

  4. Marc

    PKP’s handlers are clearly advising him now. As for Sun “News” Network, they’ve broadcasted more apologies than information, so free up the bandwidth for something actually useful.

    1. William

      The Sun News cable channel only gets a license to use the Sun name for one more year, after which time they will have to rebrand.

  5. JS

    So if Postmedia has to sell off a paper in every city where they own more than one, they’d have to either sell the Sun chain or the papers they own now. Would this deal even be worth it then?


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