As part of its expansion into local community newspapers, Transcontinental Inc. has bought Quebec's oldest weekly paper, Le Canada Français, and a stable of others in southern Quebec.
The Montreal-based company said Monday that it acquired Groupe Le Canada Français, owner of 11 weekly and monthly papers and associated websites. The move furthers a push into more local content for Transcontinental, whose executives have focused on making acquisitions in its traditional print publishing business right now.
It's not just the storied 151-year history of Le Canada Français or the local ad sales of the other papers that Transcontinental has its eye on. Digital competition is growing in local markets, with locally targeted group buying sites such as the vastly popular Groupon. Transcontinental has its own daily deal websites, La Méga Prise and The Mega Catch.
By owning well-known community papers, Transcontinental is hoping to gain a foothold in local markets that will help it not only sell print advertising, but also increase brand recognition for its local digital businesses.
"It's at the intersection of those two initiatives" to spend Transcontinental's free cash flow on both interactive digital acquisitions, and acquisitions in its traditional print business, said Natalie Larivière, the president of Transcontinental. "Print will always provide quality of voice, and confidence in the brand. … They say, 'Okay, this paper has been part of our life for 150 years' - that's very powerful."
Le Canada Français, which Ms. Larivière called the "jewel" of this acquisition, has the second-highest paid circulation of any weekly paper in Quebec. It was originally founded as Le Franco-Canadien in Saint-Jean-sur-Richelieu in June 1860 by Félix-Gabriel Marchand, who would later become premier of Quebec. It was launched as a Liberal paper devoted to expanding francophone media in Canada.
When the paper was sold to Conservative owners, Mr. Marchand launched Le Canada Français in 1893 to compete with it and then merged the two papers when he regained control. The paper has continued to publish in Saint-Jean-sur-Richelieu ever since.
Transcontinental is hoping for some of the goodwill attached to Le Canada Français's long history to rub off on its local ventures - and for more visibility in the other markets it has bought into with this deal, including Napierville, Farnham, and Granby. The acquisition comes at a challenging time for Transcontinental's media business, which publishes community newspapers as well as magazines across Canada.
The media segment's operating income dropped in the first half of this year, to $22.3-million, compared to $33.3-million in the first half of 2010. Media companies in general have been struggling with a local print advertising market - which is key for the community papers - that has been slower to rebound from the recession than national print ad sales.
And there's no indication that local market is getting any better, at least for the moment. On a conference call last month, chief financial officer Benoît Huard told analysts he does not expect local ad sales to grow in the current quarter, and would not predict whether that would change by the end of the company's fiscal year in October.
Still, the company is looking to new digital businesses, such as group buying websites, in the hope that investing in local reach could pay off. In an interview Monday, Ms. Larivière said that there are likely more acquisitions in local media to come.
"We're looking at the local market as a growth opportunity for Transcontinental," chief executive officer François Olivier told analysts on a conference call last month.
Papers Transcontinental has acquired with the deal:
1) Le Canada Français (Saint-Jean-sur-Richelieu) - Average paid circulation: 11,973
2) Le Richelieu (Saint-Jean-sur-Richelieu) - free
3) Le Coup d'Œil (Napierville) - free
4) Le Journal L'Express (Granby) - free
5) L'Avenir & Des Rivières (Farnham) - free
6) Le Guide (Cowansville) - free
7) Richelieu Agricole - free
8) Le Canada Français Affaires - free
9) L'Express Affaires - free
10) Le Guide Affaires - free
11) L'Avenir & des Rivières Affaires - free