The Canadian Press, the national news service that began as a way to distribute reports from the front back to Canada during the First World War, has struck a tentative deal that will transform the 93-year-old organization.
Faced with mounting financial challenges, the organization is proposing to convert itself to a for-profit company, from an industry co-operative. Under the arrangement, The Canadian Press would be owned by its three largest members: CTVglobemedia, which owns The Globe and Mail; Toronto Star publisher Torstar Corp.; and Gesca, which owns La Presse.
The agreement is not yet a done deal and still requires federal approvals.
The service has stitched the country together for close to a century by distributing news from the smallest communities to the largest cities. In 2006, a standing senate committee evaluating the media industry in Canada said the wire service was important to the "universal accessibility" of news, since it allowed smaller outlets to have access to international news gathering, while also telling stories from remote communities.
Financial difficulties in recent years, created in part when members of the co-op dropped out, led to discussions about restructuring so that the service wasn't dependent on member contributions for its operating costs.
"Our [pension]solvency problem has grown steadily worse," Paul Woods, director of human resources, wrote to staff in an internal memo, underlining the difficulty the company has had keeping up contributions to its pension plans.
The Canadian Press has been a fixture of the Canadian news landscape since the days when Morse code was still a viable form of communication. The existence of the newswire led to the building of telegraph wires across Canada, connecting the country and providing news from abroad.
But in recent years, two of its largest members dropped out of the co-operative, dealing a blow to its revenues. CanWest Global Communications Corp. pulled its subscription in 2007, relying on its own internal newswire, CanWest News Service. CNS has struggled, however, with finding outside subscribers. Sun Media Corp. also gave notice in 2009 that it would leave The Canadian Press - a change that went into effect this month. Quebecor Inc., which owns Sun Media, is also exploring setting up its own news-sharing service.
After those departures, the three companies now considering investing in The Canadian Press are also its largest members. They are proposing to invest enough money - believed to be in the single-digit millions - to allow it to operate, with the goal of generating a profit and paying down its pension plan deficit.
To temporarily relieve the company's financial burdens while it looked for investors, The Canadian Press obtained federal approval in January, 2009, to delay pension payments to make up a $34.4-million deficit in its pension plans, from 2009 until 2011.
The government also agreed that, if the news service's restructuring was successful, it could bring in a longer-term plan for relief. The Canadian Press will now ask the government to implement a 13-year special payment schedule, which would require the approval of Finance Minister Jim Flaherty and the Office of the Superintendent of Financial Institutions, which regulates pensions. The investors will not sign the deal, however, unless there is union agreement to the terms.
"The investors are committed to securing the future of our pension plans … supported by a profitable operation that can meet all of its obligations through cash-flow generation," Mr. Woods wrote.
In order for the restructuring to proceed, the three investor companies have required that Canadian Press improves the financial health of its pension plans, and bring in a new type of defined contribution plan for future employees.
Talks with union members have now resumed; collective bargaining was delayed while the company worked out a restructuring plan. The company has set a target of the end of August for completing those talks, so that it can complete the transaction with the proposed new investors by October.