Tag Archives: Quebecor

| Media

Here’s what commitments Quebecor and Rogers made to get Shaw merger approved

It’s official: Rogers is finally buying Shaw.

The last approval necessary for the deal to go through was given this morning, with industry minister François-Philippe Champagne signing off on the transfer of wireless spectrum from Shaw to Videotron. The companies say they have given themselves an extra week to close the deal (and once that happens I’ll have a lot of changes to make to the media ownership chart).

Champagne’s approval comes with a lot of conditions, and rather than just have them make promises, he had them sign contracts (Videotron, Rogers) with provisions for fines if they break their commitments.

Here’s what those contracts say:

Rogers

  • Must spend $1 billion building out its network to give more people 50 megabit download/10 megabit upload internet access in rural areas, at the same price as urban areas
  • Must “consult with Indigenous communities to create Indigenous-owned and operated internet service providers” using Rogers networks.
  • Must spend at least $2.5 billion on 5G coverage in western Canada within five years
  • Must spend at least $3 billion more on its network aside from that $2.5 billion above
  • Must offer low-cost internet access to more low-income Canadians, and promote that offering
  • Must establish its “Western Canadian Headquarters” in Calgary (what qualifies as headquarters is not defined) and keep it there for 10 years
  • Must “create 3,000 new jobs in western Canada” and maintain them for 10 years
  • Must keep prices the same (or better) for Shaw Mobile customers for five years (Shaw Mobile customers stay with Rogers as they’re bundled with Shaw cable)
  • Must report annually on its progress on these commitments, and post that report to its website.

If Rogers “materially” breaches these conditions, it can be fined up to $100 million a year, or $1 billion total. These are maximum fines, no matter how many conditions are breached.

Exceptions to the fines include:

  • They can’t apply before the deadlines (so a “within five years” commitment can only be fined after those five years, and only for the remaining five years)
  • They can’t apply after 10 years
  • They can’t apply in case of “force majeure” including labour disruption, natural disaster or supply chain issues

Quebecor/Videotron

  • Must keep Freedom Mobile’s pricing (or better), and offer 10% more data, for five years
  • Must offer Freedom pricing at “similar” rates to Videotron’s offer in Quebec
  • Must extend service to Manitoba (via a virtual network) within three years, at prices similar to Quebec
  • Must “maintain an equivalent number of direct and indirect jobs for skilled workers”
  • Must offer new plans in Freedom Mobile’s markets at least 20% below Big Three plans as they existed on Feb. 10.
  • Must offer 5G in its markets within two years
  • Must confidentially share business plans with the industry department upon request
  • Must publish yearly reports on its progress (excluding confidential info)

Videotron has a similar fine structure as Rogers, but it only applies as of Year 3, and has a limit of $25 million total per year, or up to $200 million total. And for whatever reason (Videotron’s lawyers not as good?) its “force majeure” clause is more restrictive, and doesn’t include things like supply chain problems or employee lockouts.

In both cases, the agreement expires after 10 years, so in April 2033, none of these commitments will apply anymore.

What this means

As a recap, Rogers will acquire all Shaw’s cable assets in western Canada, plus the Shaw Direct satellite TV service, Shaw Mobile (customers but not spectrum) and other Shaw assets. Videotron will acquire Freedom Mobile, which serves B.C., Alberta and southern/eastern Ontario, including all its spectrum holdings.

The broadcasting assets involved are minimal, consisting only of the community channels and video-on-demand licences associated with Shaw Cable. Shaw sold the rest of its broadcasting assets to Corus, which continues to operate as a separate company controlled by the Shaw family.

The government is requiring Videotron also expand to Manitoba within three years, because its last major wireless merger (Bell buying MTS) failed to produce a maintain fourth player in that province. Bell sold some MTS subscribers to Telus and others to Xplornet, which created Xplornet Mobile out of the deal, but Xplornet Mobile shut down last year.

So within three years, Videotron will be the fourth wireless player in B.C., Alberta, Manitoba, southern/eastern Ontario and Quebec. That leaves Saskatchewan (SaskTel), northern Ontario (TBayTel) and Atlantic Canada (Eastlink) covered by smaller regional players.

Videotron won’t have wireline networks outside Quebec, which limits its ability to bundle. It acquired VMedia, a third-party internet and TV access provider who provides services using incumbent telecom companies’ networks, as a way to offer a bundle package in the rest of the country. We’ll see how successful they are.

Winners and losers

At first glance, this seems like bad news for a lot of people who don’t like concentration in Canada’s telecom space. It definitely makes Rogers a bigger player overall, which further distorts the disparity between the big guys and the smaller and midsize guys.

For wireless customers in the Freedom territory, it’s a bit of a win, because prices will stay the same or even go down. If the alternative was Freedom shutting down like Xplornet did, that would have been much worse. And Videotron has a much more solid foundation.

For TV subscribers, the difference in competition is relatively low since Rogers and Shaw don’t overlap. The exception is Shaw Direct, which means in theory a Rogers cable TV subscriber in southern Ontario won’t have a satellite service competing for their business because it’s also owned by the same company.

For broadcasters not owned by Rogers, they face a much larger opponent at the bargaining table. If Rogers wasn’t a must-have for any cable TV channel wanting carriage in Canada, it is now. Rogers will be able to demand conditions that are more favourable to itself.

One big loser will be Global News. The CRTC policy that effectively killed community TV funding allows TV providers to funnel money to related local TV stations. When Shaw Cable and Shaw Direct become Rogers, that funding of about $13 million a year will stop flowing to Global News and start flowing to Rogers’ CityNews. Global will then become an “independent” TV broadcaster and be eligible for the Independent Local News Fund, but funding for that fund was established based on the number of independent stations at the time, and it doesn’t have $13 million extra to give to Global. This means not only will Global get less money, but all other independent TV stations (NTV, CHEK, CHCH, and stations owned by Pattison, Stingray, RNC Media, Télé Inter-Rives, Thunder Bay and Miracle Channel) will also get less until the CRTC or federal government can sort out what to do about it.

| TV

Bell makes Crave bilingual, opening another front in its war with Quebecor

I regret to inform you that Bell and Quebecor are at it again.

The latest skirmish? Bell’s announcement that it is launching a French version of its Crave streaming service, or more accurately making its existing Crave service bilingual. This adds a third player to the (paid) Canadian French-language TV streaming market, joining Radio-Canada’s Tou.tv Extra and Quebecor’s Club Illico.

That sounds pretty simple, and generally good news for the market. Annoying for Quebecor, obviously, to have a new competitor, but hardly something they can complain about.

Except at the same time, Bell is doing with its Super Écran pay TV channel what it did with The Movie Network in 2018: Integrating it into Crave and forcing TV providers into a new deal to get access to Super Écran’s on-demand content for their subscribers. (Super Écran will, thankfully, keep its branding though, and be referred to as a Super Écran add-on to Crave.)

Bell has reached such deals with some providers, but not Videotron, which is calling foul because Bell has shut down Super Écran Go, through which Videotron customers subscribed to Super Écran could access its content online.

The 2018 Crave-Videotron war didn’t last too long, but it needed a $100-million lawsuit to settle. And Bell and Quebecor aren’t exactly great at negotiating these days.

Continue reading →

| Media, My articles, Opinion

Quebecor’s shifting arguments against Tou.tv

It will come as no surprise to you that Quebecor and Canada’s public broadcaster are not the best of friends. Quebecor’s controlling shareholder and CEO, Pierre Karl Péladeau, has complained about it many times in the past. (He also complains about La Presse, Bell, the Quebec Liberal Party, the Quebec government and others.)

This week, Quebec’s largest telecom and media company filed a complaint with the CRTC demanding that it order CBC/Radio-Canada to shut down its Tou.tv Extra streaming service. Not all of Tou.tv, just the $7/month premium version that charges for premium content.

I examine the application in this article for Cartt.ca subscribers. In short, Quebecor is arguing that:

  • As a public broadcaster, it’s improper for CBC/Radio-Canada to charge for access to content paid for by taxpayers, and goes against its mandate.
  • Since it licenses some content from other broadcasters (Télé-Québec, V, Canal Vie, TV5 and others), it is a de facto TV provider and should be licensed as such, including obligations to spend 5% of its revenue on Canadian programming funds.
  • Its deal with Telus giving Telus’s customers free access to Tou.tv Extra is an illegal undue preference and against the rules for digital media broadcasters.
  • CBC’s last licence renewal in 2013 included a note from the CRTC that said it does not charge for access to its streaming service (Tou.tv Extra launched in 2014), which Quebecor argues is a de facto condition of acceptance.

Quebecor lays it on pretty thick in the application, saying CBC/Radio-Canada is “short-circuiting the Canadian broadcasting system with taxpayer money” and “creating two-tier public television: enriched content, exclusives and offers first to the better off, and regular content and reruns to the masses.”

In a procedural letter, the CRTC says that issues related to CBC’s mandate should be dealt with in the CBC licence renewal proceeding, which is currently under way. Other issues of fairness can be dealt with in the context of an “undue preference” proceeding, which it will examine.

I could point out some of the obvious counter-arguments to Quebecor’s argument (Tou.tv Extra does not offer live streaming of cable channels, only some of their content on demand; there is no condition of licence requiring it to be free; it’s basically the same model as Quebecor’s own Club Illico; the deal offered to Telus was offered to others as well including Videotron, who choose not to take it; even if there is undue preference, it does not mean Tou.tv Extra needs to cease its operations), but what struck me today as I was doing some Google searching is a post I wrote 10 years ago just after Tou.tv first launched, when Péladeau complained about it then. Here’s a paragraph I excerpted from an open letter he wrote:

Furthermore, the CBC has launched the Tou.tv website without consulting the industry, a move that jeopardizes Canada’s broadcasting system by providing free, heavily subsidized television content on the Internet without concern for the revenue losses that may result, not only for the CBC but also for other stakeholders, including writers and directors.

So, in 2010 Péladeau argued that Tou.tv threatened the broadcasting system by not charging a fee.

And in 2020 Péladeau argues that Tou.tv Extra threatens the broadcasting system by charging a fee.

You have to give this to Péladeau: He’s got quite the ability to argue. It must be fun working in his regulatory affairs department.

| TV

CRTC approves Quebecor’s acquisition of Évasion and Zeste TV channels

Quebec’s television industry is about to lose a voice.

On Monday, the CRTC approved the proposed acquisition of Groupe Serdy, owner of French-language specialty channels Évasion (travel) and Zeste (food) by Quebecor’s Groupe TVA for $21 million.

The acquisition was challenged by V, on the grounds that TVA already has too much power in the market, but the CRTC said the increased market share would be minimal, and in any case still lower than the 45% limit above which it would normally deny such applications.

The application to transfer the licences was supported by dozens of interveners, including many producers.

In addition to $1.8 million in tangible benefits, split between the Canada Media Fund, the Quebecor Fund and Telefilm Canada’s Talent Fund, the transaction will also result in an increase in Canadian spending quotas for both channels, as they’re integrated into the TVA group licence. Évasion must spend 40% of its revenues on Canadian content, while Zeste has no quota. As a condition of approval, both must now come up to the TVA group quota of 45%. And 15% of their revenues must be spent on “programs of national interest” (scripted drama and comedy, documentary and award shows) for the TVA group.

A similar transaction, involving Bell attempting to buy Historia and Séries+ from Corus, was blocked by the Competition Bureau.

| Radio

Quebecor’s QUB Radio could change the business, but it’s technically incomplete

If you’ve been watching TVA or LCN (Oct. 4, Oct. 6, Oct. 13, Oct. 14, Oct. 15) or reading the Journal de Montréal (Oct. 4, Oct. 5, Oct. 6, Oct. 10, Oct. 14, Oct. 15, plus this and this) you’ve been bombarded with news about QUB Radio, Quebecor’s new online radio station. It launched on Monday, providing live talk programming from 6am to 5pm on weekdays and filling the rest of the schedule with repeats, podcasts and rebroadcasts of TVA/LCN news programming.

On one hand, this kind of major effort from a large media company could be what pushes mainstream audiences into online radio. On the other hand, the QUB platform is missing basic features that make it unnecessarily frustrating to consume.

Continue reading →

| Media

Quebecor finally rids itself of the Caisse

It’s being eclipsed by some other Quebec media ownership news, but Quebecor announced today at its annual shareholders meeting that it is completing its buyback of shares in subsidiary Quebecor Media owned by Quebec’s pension fund manager, the Caisse de dépôt et placement du Québec. Once that sale is complete, Quebecor Media, a company started in 2000 with the Caisse’s help to purchase Videotron (and keep it out of the hands of Rogers) will be completely owned by Quebecor Inc.

The transaction won’t completely eliminate the Caisse’s investment in Quebecor. Some of the $1.69 billion the Caisse is getting is in the form of Quebecor Inc. stock, and the Caisse already has some Quebecor stock from previous deals and investments (its 2017 annual report put the value at between $300 million and $500 million). But getting the Caisse out of Quebecor Media simplifies the situation and means Quebecor can decide what to do with Quebecor Media’s profits and the Caisse becomes just another shareholder.

Through his family’s voting shares, Quebecor is de facto controlled by Pierre Karl Péladeau, who controls 73% of voting power in Quebecor Inc.

Whether the Caisse’s $3.2-billion investment in Quebecor Media was the right one is the subject of some debate. In pure dollar amounts, the Caisse is getting back more money than it invested, but barely keeping pace with inflation if it even did. Had the money been invested otherwise, it may have brought back more. On the other hand, Videotron and TVA might be owned by Rogers now, and it’s hard to predict what the Canadian media industry would have looked like as a result.

Timeline

  • 2000: The Caisse de dépôt et placement du Québec buys a 45.3% stake in Quebecor Media for $3.2 billion to finance the purchase of Videotron (which also owned TVA). Quebecor Media is valued at $7.06 billion.
  • 2012: Quebecor reduces Caisse’s stake from 45.3% to 24.6% in $1.5-billion deal ($1 billion in cash from Quebecor Media and $500 million in shares of Quebecor). The full 45.3% stake is valued at $2.75 billion, and so Quebecor Media as a whole is valued at $6.07 billion. The Caisse’s remaining share is valued at $1.5 billion, and the Caisse notes it has received $324 million in dividends since 2003.
  • 2015: Quebecor reduces the Caisse’s stake from 24.6% to 18.93% for $500 million in cash. This would value Quebecor Media at $8.8 billion and the Caisse’s remaining stake at $1.67 billion. Quebecor promises to buy back the rest of the Caisse’s interest by 2019.
  • 2017: Quebecor further reduces the Caisse’s stake from 18.93% to 18.47%, buying $38 million worth of shares in cash. This would value Quebecor Media at $8.3 billion and the Caisse’s remaining stake at $1.53 billion.
  • 2018: Quebecor completes the repurchase of the Caisse stake, buying the remaining 18.47% of shares for $1.69 billion (91.1% cash, 8.9% Quebecor stock). This values Quebecor Media at $9.15 billion.

In total, just in terms of share value and not counting for inflation or dividends, the Caisse invested $3.2 billion in 2000 and over the various buybacks got $3.7 billion. (According to the Globe and Mail, the total payback is estimated around $4.1 billion.)

In terms of inflation, that $3.2 billion should have been worth $4.1 billion in 2012 and $4.5 billion today. $3.2 billion in the S&P/TSX composite would have been worth $4.8 billion.

I’m not a stock market expert and I’m not going to do a full analysis here. Maybe someone else has the time and patience to consider all the variables (and someone from Quebecor will spend time refuting those conclusions), but the debate is mostly moot now, because the Caisse’s (direct) investment in Quebecor Media has been liquidated.

| TV

TVA pulls the plug on Argent

argent-logoArgent, the only French-language business specialty channel in Canada, is being shut down on April 30, owner Groupe TVA announced on Tuesday.

The television and cable industries are in turmoil and TVA Group has concluded that, despite the marketing efforts made in recent years to support Argent, it would be difficult if not impossible to achieve the profitability to continue operating the economic and financial channel.

I’m not sure what those “marketing efforts” were exactly (I’ve never seen an ad for the channel, beyond the branded business pages of the Journal de Montréal), but questions can certainly be raised about TVA’s commitment to the channel, which for one thing was never distributed in high definition, even on Quebecor’s Videotron cable system.

After taking its usual unnecessary swipe at Canada’s public broadcaster (which doesn’t have a business news channel), TVA said the decision would affect an unspecified number of employees. La Presse reports its nine permanent employees will stay with TVA, but their shift to other jobs might affect temporary employees at LCN and elsewhere.

The channel launched in 2005.

According to data submitted to the CRTC, Argent’s financial situation has been in significant decline since 2010-11, going from $4.2 million in revenue to $2.4 million in 2013-14. (Data for the year ending Aug. 31, 2015 should be out within the next month or two.) This is largely because of a decline in subscription revenue (advertising makes up only 2% of revenue), which in turn is because of a decrease in the number of subscribers, from a high of 957,000 in 2010 to 552,000 in 2014.

In the three years from 2012-14, the channel lost almost $2 million, and nothing indicates that 2015 or 2016 would have been any different.

The news of Argent’s shutdown has interesting timing since Canada just added its second English-language business channel (Bloomberg TV Canada) and the first one, Business News Network, is still doing quite well financially, with a 40% profit margin.

And the suggestion that this decision comes out of the CRTC’s recent pick-and-pay TV decision also doesn’t jive with the fact that its financial troubles started long before then and that Videotron, also owned by Quebecor, has been offering custom channel packages for many years now.

But these days it makes more sense for a Canadian business channel to be based in Toronto than Montreal. The only place I remember seeing Argent on TV was at my local Caisse Desjardins bank. I guess they can switch to LCN.

Cuts in QMI’s investigative bureau

UPDATE (April 21): Meanwhile, there were cuts to the investigative reporting team at Agence QMI, Quebecor Media’s shared journalism outlet.

https://twitter.com/AndrewQMI/status/722844090702794753

Andrew McIntosh is an investigative reporter who’s been in the business more than 30 years, working for the Globe and Mail, Montreal Gazette and National Post before joining QMI in 2010 as their top investigative reporter. His awards include three National Newspaper Awards.

You can read some of his reporting for QMI here.

The other high-profile departure is Michel Morin, who was a journalist with Radio-Canada until he became a CRTC commissioner. After his term at the broadcasting regulator ended, he joined QMI’s investigative team. You can read some of his stories here.

| Media

Competition Bureau approves Postmedia’s acquisition of Sun Media

I’m about to acquire a lot of colleagues.

The Competition Bureau has approved (in the sense that it will not oppose) the $316-million acquisition of Sun Media’s 174 newspapers and publications in English Canada, the Canoe portal and other assets by my employer, Postmedia Network.

Press releases from Postmedia and Quebecor say the deal will close in the coming weeks. Once that happens, Postmedia will own the lion’s share of print media in English Canada, including three of six dailies in Toronto, and two paid dailies in Vancouver, Edmonton, Calgary and Ottawa.

The bureau appears to have agreed with Postmedia’s argument that competition from other forms of media, particularly online, will prevent this transaction from becoming anti-competitive. The bureau also points to “the lack of close rivalry between Postmedia’s broadsheet and Sun Media’s English-language tabloid newspapers” and “existing competition from free local daily newspapers” in its decision.

I’ll update my media ownership chart once news comes down that the transaction has closed.

| Media

Transcontinental sells 15 magazines to TVA for $55.5 million

The transfer of large collections of print media to and from Quebecor has taken another step, with the announcement that Transcontinental is selling 15 magazines to its Groupe TVA subsidiary for $55.5 million (or $3.7 million each on average). (Quebecor release, Transcontinental release)

The deal, which also includes a contract that will see Transcontinental continue printing those magazines for seven years, includes the following (with number of editions a year and average circulation where I could find it):

French magazines

  • Coup de pouce (general consumer magazine for women) — 12 x 209,260
  • Véro Magazine (women’s lifestyle magazine tied to TV personality Véronique Cloutier) — 4 issues/year
  • Décormag (home decorating) — 10 x 74,038
  • Fleurs Plantes Jardins (gardening) — 6 x 54,166
  • Québec Vert (horticulture) — 6 x 6,200
  • MaisonNeuves.com
  • Condo Maison Direct
  • Elle Québec (51%, with Hearst) (fashion and beauty) — 12 x 81,211
  • Le Bel Âge (50%, with Bayard Group) (lifestyle magazine for seniors) — 11 x 130,122

English titles

  • The Hockey News — 24 x 100,058
  • Canadian Living (general lifestyle) — 12 x 521,169
  • Style at Home (home decorating) — 12 x 233,878
  • Canadian Gardening — 6 x 92,624
  • Elle Canada (51%, with Hearst) (fashion and beauty) — 12 x 126,967
  • Good Times (50%, with Bayard Group) (lifestyle magazine for seniors) — 11 x 131,487

Digital

Not included are Les Affaires magazine or other business publications, or magazines regional to Western Canada, Vancouver Magazine and Western Living.

These would be the first major English magazines to come under the umbrella of TVA Publications.

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| Media

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 Canoe.ca 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.

| Media

Transcontinental sells 14 community newspapers, shuts down 20 more

Following through on commitments made when Transcontinental bought Quebecor’s entire slate of community newspapers in Quebec, the company has received Competition Bureau approval to sell 14 community newspapers to smaller companies. And Transcontinental has responded by announcing it is shutting down 20 more, laying off 80 people.

The papers being sold, a mix of those previously owned by TC and Quebecor, are among 34 papers that Transcontinental was ordered to put on the market because they compete with other papers also owned by the company. (One of those papers, Le Courrier du Saguenay, which includes the Courrier du Fjord, Courrier de Jonquière and Courrier de Chicoutimi, was later removed from that list.)

Sold to Les Médias de la Rive-Sud:

  • Le Journal de Saint-Hubert (QMI)
  • Rive-Sud Express in Longueuil (TC)

Sold to Serge Langlois, Michel Langlois, Claude Langlois, Carole Côté and Pierre-Marc Langlois, who also own Les Éditions Blainville Deux-Montagnes:

  • L’Echo du Nord in Saint-Jérôme (QMI)

Sold to Néomédia, a division of iClic Inc., where they will become online-only publications:

  • Agri-Vallée in Valleyfield (QMI)
  • Chambly Express (TC)
  • Le Journal de Joliette (QMI)
  • Le Point du Lac-Saint-Jean in Saint-Félicien (QMI)
  • Le Réveil in Saguenay (QMI)
  • L’Echo de la Rive-Nord in Sainte-Thérèse (QMI)
  • L’Echo de Laval (QMI)
  • L’Echo de Trois-Rivières (QMI)
  • Pub Extra Magazine in Laval-Laurentides (QMI)
  • Sorel-Tracy Express (TC)
  • Vallée du Richelieu Express in Mont-Saint-Hilaire (TC)

The remaining 19 community newspapers are now Transcontinental’s to do with as they please. Of them, 18 are on the shutdown list:

  • Abitibi Express – Rouyn-Noranda (TC, competed with Quebecor’s Le Citoyen)
  • Abitibi Express – Val d’Or (TC, competed with Quebecor’s Le Citoyen)
  • Le Progrès Écho, Rimouski (QMI, competed with Transcontinental’s L’Avantage)
  • Le Rimouskois, Rimouski (QMI, competed with Transcontinental’s L’Avantage)
  • L’Impact de Drummondville (QMI, competed with Transcontinental’s L’Express)
  • L’Écho de Victoriaville (QMI, competed with Transcontinental’s La Nouvelle Union)
  • Édition Beauce Nord, Sainte-Marie (TC, competed with Quebecor’s Beauce-Média)
  • Le Journal de Magog (QMI, competes with Transcontinental’s Le Reflet du Lac)
  • La Voix de la Matanie, Matane (QMI, competed with Transcontinental’s L’Avantage out of Rimouski)
  • La Voix Gaspésienne, Matane (QMI, competed with Transcontinental’s L’Avantage out of Rimouski)
  • Le Riverain, Sainte-Anne-des-Monts (QMI, competed with Transcontinental’s L’Avantage out of Rimouski)
  • L’Écho de Repentigny, Repentigny (QMI, competed with Transcontinental’s Hebdo Rive-Nord)
  • Point de vue Laurentides, Mont-Tremblant (TC, competed with Quebecor’s L’Information du Nord)
  • L’Écho de Shawinigan, Shawinigan (QMI, competed with Transcontinental’s L’Hebdo du St-Maurice)
  • Châteauguay Express, Châteauguay (TC, competed with Quebecor’s Le Soleil)
  • Roussillon Express, La Prairie (TC, competed with Quebecor’s Le Reflet in Delson)
  • Valleyfield Express, Valleyfield (TC, competed with Quebecor’s Le Soleil)
  • L’Écho de Saint-Jean-sur-Richelieu, Saint-Jean-sur-Richelieu (competes with Transcontinental’s Le Canada Français)

Also being shut down are:

The only paper that was put on the market and left unsold but will be kept by Transcontinental is Le Courrier du Fleuve in Rimouski.

Transcontinental is now left with 105 weekly papers, five biweeklies, six monthlies and one bimonthly in Quebec, plus the Métro Montreal daily, or 118 total newspapers.

UPDATE: The FNC-CSN union isn’t happy with the job losses, and worries about Néomédia, which it believes is more interested in advertising than maintaining editorial integrity.

Meanwhile, Radio-Canada’s eastern Quebec bureau gets some reaction to the closing of six papers in that region. And the FPJQ’s regional offices denounce the cuts in the Montérégie and Gaspésie regions

| Opinion, Technology

Cooperation, not acquisition, might be better option for Quebecor

Put simply: Under the right conditions we are ready, willing and able to become
Canada’s fourth wireless competitor.

With that statement two months ago, new Quebecor CEO Pierre Dion launched a campaign to create fertile ground for his company to expand its wireless operation nationally, and become the fourth national wireless player that the Conservative government has been so desperate to see arrive.

Quebecor’s main issue is roaming — the fees it has to pay other carriers when its subscribers use their networks. Until it can build a national network that rivals those of the Big Three in coverage (something that would take several billion dollars to do), it would have to offer its subscribers access to someone else’s network, and at fees that would still allow it to undercut those networks’ operators on prices.

The CRTC is holding a public hearing in September on wholesale wireless services that should address this issue. The commission will try to determine if the market is sufficiently competitive and if not, what it can do to fix that. Quebecor would like low, regulated wireless wholesale rates, particularly for data. Bell, Telus and Rogers, needless to say, aren’t in favour.

And just two weeks ago the commission slapped Rogers on the wrist for exclusive roaming deals that it determined were anti-competitive.

Quebecor’s hand

At the moment, Quebecor’s network covers populated areas of Quebec and the National Capital Region. It also has a deal with Rogers that allows Videotron customers to use Rogers’s network where necessary. A year ago, the companies signed a 20-year agreement to build a shared wireless LTE network in Videotron’s existing territory.

The thought of Videotron becoming a national player took off in February after it purchased licenses in Quebec, Ontario, Alberta and British Columbia for $233 million. Because the big three were limited in the amount of spectrum they could buy, and new players like Wind and Mobilicity didn’t have the financial means to spend that kind of money, Videotron got a deal it simply couldn’t pass up. The licences could be worth a lot more than that, even with the limitation that they can’t be sold to Bell, Rogers or Telus.

The rest of Canada is split up between other regional players: MTS in Manitoba, SaskTel in Saskatchewan, and Eastlink in Atlantic Canada and Northern Ontario. They also got good deals on spectrum because those frequencies were reserved for smaller players.

So even if Videotron wanted to become a national player, it would need to team up either with one of the big three or all of these smaller providers. Plus building out networks in Ontario, B.C. and Alberta.

It has been suggested very openly that Videotron would be interested in buying either Wind Mobile or Mobilicity (or both) to instantly get a foothold in Ontario, B.C. and Alberta. This is important because next March will see another spectrum auction from Industry Canada, and its rules reserve licences for operators other than the Big Three that are already operating in those territories. Unless Videotron sets up its network in the next six months, it’s bidding potential is limited. But acquire Wind and/or Mobilicity, neither of which have the capacity to participate in the auction, and Videotron can make another government-assisted investment.

Except Videotron doesn’t have enough cash for such an acquisition. So it would need some source of money to step up to help it. And the clock is ticking.

Politics

But spectrum licenses and cash aren’t the only impediments to Videotron’s wireless expansion. Even if it develops a decent network, Videotron has no other infrastructure in the rest of Canada. It can’t bundle wireless with cable TV and Internet like it does in Quebec. It can’t leverage its brand, or set up Videotron corners in Archambault shops in the rest of Canada.

And then there’s the politics. Pierre Karl Péladeau is still the controlling shareholder of Quebecor and Videotron. And he’s not willing to put his stake in a blind trust until he becomes a minister (and even then it would come with an order not to sell the company). So the federal government’s best hope for a company that would give a shot in the arm to competition in wireless is one owned by a devoted separatist. It’s not exactly the kind of company the government would want to bend backwards to help. And that’s saying nothing about consumers who might see switching to Videotron as tantamount to funding Quebec separation.

Cooperation

But maybe there’s another way. What if, instead of buying Wind and Mobilicity outright, it partnered with one or both, giving them enough cash to participate in the March auction and allowing their subscribers to use each other’s networks seamlessly? For that matter, why not do the same with MTS, SaskTel and Eastlink? Imagine a national wireless player made up of regional players, all with the same problem of national roaming. It would take less cash than one company gobbling up the others, and avoids the problem of having to deal with Quebecor’s not-so-great brand outside of Quebec.

There are other possibilities, too. Shaw, which is active in B.C. and Alberta and has a lot of money but doesn’t have a wireless network, could become involved, and partner with Wind or Mobilicity or Videotron to offer a wireless service they could bundle.

Perhaps it’s just pie-in-the-sky dreaming, and I’m sure people will point out a bunch of practical problems with these ideas that would make them unrealistic. But if Ottawa really wants a fourth wireless player (even though experience in other countries suggest the market might not be able to support more than three), this sounds to me like a way to get there.

Of course, it would require Quebecor playing nice with others and swallowing a lot of humble pie.

| Media

Competition Bureau: Transcontinental can buy 74 Quebecor papers, but must (try to) sell 34

The Competition Bureau has ruled that Transcontinental can acquire Quebecor Media’s 74 regional newspapers in Quebec, but in order to preserve competition, it must then sell 22 of those papers and 12 of its own.

In its decision, the bureau said it looked closely at the financial situation of the Transcontinental and Quebecor papers, noting that rivalry between the two intensified in 2009:

Since 2009, Transcontinental and Quebecor Media have engaged in aggressive competition for advertisers, entering markets where the other Party was the historical incumbent and cutting advertising prices. While a few independents remain in certain markets, Transcontinental and Quebecor Media own the only community newspapers in many of Quebec’s local communities and, as such, the Proposed Transaction may allow Transcontinental to have the only community newspaper(s) in numerous local markets.

…

The Bureau determined that at least one of the Parties’ newspapers was in financial distress in the vast majority of markets where the Parties compete. These were typically the newspapers that had been launched in recent years.

The competition rules by which the bureau operates allows for mergers that would reduce competition if the alternative is that one of the parties goes bankrupt and nobody picks up its assets, which would reduce competition anyway. The bureau’s assessment shows the community newspaper sector isn’t doing that well, but that Transcontinental should nevertheless put the newspapers on the block, and for no minimum price, for a period of 60 days, and managed by a third party.

“Following the completion of the sale period defined in the Consent Agreement, if no potential purchaser is identified for a particular paper, Transcontinental will be entitled to retain ownership of the newspaper,” the bureau writes. So Transcontinental could end up keeping many of these papers (or being allowed to shut them down and merge them with their competitors in each market) if no one else is interested in buying them for even $1 (with printing and distribution provided by Transcontinental for a limited time).

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| In the news, Media

Pierre Dion becomes Quebecor’s third boss in a year

Robert Dépatie was head of Videotron before taking over from Pierre Karl Péladeau.

Robert Dépatie was head of Videotron before taking over from Pierre Karl Péladeau.

If you’ve been following the news about Quebecor’s change in management, you won’t learn anything new here. I don’t know if the unspecified “health reasons” that Quebecor mentioned as the reason for CEO Robert Dépatie’s sudden retirement are the whole story, or if La Presse is correct and this is more about a difference of strategy.

But there are some things we do know. Dépatie was CEO of Videotron before he took over from Pierre Karl Péladeau as head of Quebecor and Quebecor Media last year. He comes from the telecom side, and he knew it very well.

His legacy includes some big spending: a deal the Globe and Mail puts at more than $1 billion over 12 years to acquire NHL broadcasting rights from Rogers, and a purchase of wireless spectrum for $233 million. It also includes big moves away from print media: The decision to shut down three free 24 Hours newspapers and either weeklies, then a deal to sell all 74 of its remaining weekly newspapers in Quebec to competitor Transcontinental for $75 million, and to shut down the flyer delivery service Le Sac Plus.

The effect of these moves will likely last more than a decade.

Both La Presse and Le Devoir suggest Dépatie wanted to go further, selling English-language Sun Media papers as well (it’s unclear if these would be the Sun chain or the smaller weekly papers, including the Osprey Media chain that Quebecor spent more than $500 million to buy in 2007).

Analysts quoted in various media have had very positive views of Dépatie, and their main concern about his successor, TVA president Pierre Dion, is that he comes from the broadcasting side and not the money-generating telecom side. There was a slight drop in the company’s stock as a result of the news.

On one hand, having a third CEO in under a year is destabilizing. On the other hand, Pierre Dion isn’t a stranger to Quebecor’s upper management. He, along with Péladeau, Dépatie, corporate affairs VP Serge Sasseville and more recently new Videotron president Manon Brouillette have been present during major events involving the company as a whole, whether it’s major announcements or big CRTC hearings. Dion has been on Quebecor Media’s board since 2004 and has been part of its major decisions.

La Presse asks whether this shakeup might prompt Pierre Karl Péladeau to abandon his political ambitions and take back control of the company he still owns. That presupposes, of course, that with his friends and former colleagues still in control of the company, that he doesn’t already exercise some sort of control, unofficially if not legally.

Pierre Dion may shift Quebecor’s emphasis and make different decisions, but I doubt there will be any big sea change. The company’s personality, whether you love it or hate it, remains the same.

| In the news, Media

Pierre Karl Péladeau analysis in point form

Pierre Karl Péladeau

To say that Pierre Karl Péladeau’s announcement that he’s running for the Parti Québécois was a bombshell would be an understatement. The announcement monopolized the news cycle on Sunday and again on Monday. We’re still talking about it because of its implications. Canada’s largest newspaper chain is owned by a separatist. A media mogul is running for office, and everyone expects the media he owns to stay objective on the matter. And his selection is a huge risk for the PQ, which can ride his economic bona fides to power or see itself torn apart by ideological differences (whether or not it wins a majority).

His media outlets insist in French and in English that he has no control over them. Sun News handled the news straight, declaring that they too are not under Péladeau’s control. Here’s Brian Lilley and here’s Lorrie Goldstein. (Ezra Levant is fighting a libel lawsuit and hasn’t been on the air.)

There are news stories and analyses of Péladeau all over the place, but here are a few that are worth reading: 

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