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Pedestrians walk past The Canadian Press head office entrance in TorontoGraeme Roy/The Canadian Press

After nearly two years of work to transform one of Canada's oldest news institutions, The Canadian Press has closed a deal to become a for-profit service owned by its three largest members.

The Globe and Mail, Square Victoria Communications Group, and Torstar together have reinvested in a new entity, Canadian Press Enterprises Inc., which will take over operations of the organization that for 93 years has operated as an industry co-operative. Square Victoria is the parent company of Gesca Ltée, which operates French-language newspaper La Presse. Torstar publishes the Toronto Star.

The deal comes just before a deadline set by the federal government for CP to find new investors. In January, 2009, struggling under the weight of a $34.4-million deficit in its pension plans, CP was granted federal approval to delay pension payments until 2011. The deadline to find a solution - in the form of new owners who could reinvest in CP under a corporate structure - was Nov. 30.

The three investors reached a tentative deal in July, but their investment was contingent on receiving further relief on pension payments. The Finance Department and the Office of the Superintendent of Financial Institutions has now extended that relief until 2022.

"CP is a very important national institution," The Globe's publisher and chief executive officer Phillip Crawley said Friday. "The government was right to recognize that this needed special support."

The co-operative's board will now be replaced by a board consisting of two representatives for each of the new owners; including Mr. Crawley, Toronto Star publisher John Cruickshank, and Guy Crevier, president of Gesca and president and publisher of La Presse. The new board will have its first meeting on Monday.

"Working together as an ownership team guarantees that CP will be able to continue its tradition of delivering quality content across Canada in the years ahead," Mr. Crevier said in a statement.

The Canadian Press now faces the challenge of finding new ways to make money in an increasingly competitive media environment. Currently, about one-third of CP's revenue comes from newspaper operations. Other subscribers to the service include radio and television broadcasters, websites and other digital content, government offices and commercial operations such as financial institutions.

CP suffered a blow to its business in the past three years, as two prominent members left the co-operative. In 2009, Sun Media Corp. announced it would cease its subscription, effective this past summer. That followed CanWest Global Communications Corp.'s decision in 2007 to leave CP and launch its own news service - now called Postmedia News following the sale of the newspapers to Postmedia Network Inc. earlier this year. Other wire services have felt similar pressures in recent years - Associated Press, for example, has seen its newspaper subscribers object to the cost of accessing the news service, and has lost members as media organizations ran into financial difficulties. The Canadian Press has an exclusive deal to distribute AP content in Canada.

Mr. Crawley stressed that payments toward reducing the pension deficiency would come out of the business CP generates, and not from the operations of its owners.

"We're very pleased to work with the other investors to bring CP forward into the future, and we believe it will be a great success," Torstar chief executive officer David Holland said in an interview on Friday.

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