Desmarais-owned Gesca Ltée is selling its six regional newspapers to former federal Liberal cabinet minister Martin Cauchon so it can focus entirely on the digital platform of its flagship daily La Presse.
Gesca president Guy Crevier said on Wednesday that the company is encouraged by the results so far of its daily tablet publication La Presse+ and wants to expand it. The regional papers did not quite fit with the tablet business model for various reasons, including reduced access to high-speed Internet in some areas, he said in an interview.
Mr. Cauchon, who was a member of former prime minister Jean Chrétien's cabinet, is heading up a new company, acquiring Quebec City's Le Soleil, Ottawa's Le Droit, Sherbrooke's La Tribune, Chicoutimi's Le Quotidien, Trois-Rivières' Le Nouvelliste and Granby's La Voix de l'Est.
The value of the deal was not disclosed. Mr. Crevier said not all the papers make money, but that as a group they are profitable.
These are difficult, uncertain times for the newspaper industry, which has for years suffered shutdowns and staff layoffs across North America amid declining ad sales and a dramatic shift to digital and mobile news.
Gesca has a deal to help the Toronto Star build a new tablet edition based on the La Presse+ model. Having spent $40-million to launch the free tablet application two years ago, the company is in regular discussions to add further clients in the United States and Europe, selling them its technology, development and training expertise.
La Presse has also openly speculated about scrapping its print edition in the coming years.
"It's something that we're considering," said Caroline Jamet, the paper's vice-president of communications.
In the meantime, the company is aggressively marketing La Presse+ in print ads and live demonstrations, looking to speed the shift to digital reading, after use of its tablet app spiked an estimated 45 per cent in 2014.
The new company – Groupe Capitales Médias Inc. – is committed to ensuring a strong and thriving regional newspaper network in Quebec, Mr. Cauchon said at a news conference to announce the transaction.
"We have our challenges," he added.
Pierre-Karl Péladeau, controlling shareholder of Gesca rival Quebecor Inc., quickly fired off a tweet alleging the sale of the papers to Mr. Cauchon is just a "false front" for their intended folding. "The killer question: When?" tweeted Mr. Péladeau, who is running for the leadership of the Parti Québécois.
Mr. Cauchon is a friend of the Desmarais family, who control Gesca through their holding company Power Corp. of Canada.
Mr. Crevier said the sale to Groupe Capitales is not a fire sale and took four months of negotiations before an agreement was reached.
Other would-be buyers expressed interest in the regional publications, he said.
"We came to the conclusion that the model of accelerated transfer to our La Presse+ platform does not hold up for the regional newspapers right now," Mr. Crevier said.
"I'm not saying that the development [of the tablet] was done to the detriment of the regional newspapers, but over the past three years all of our efforts, all of our strategies, have been centred on La Presse+."
The regional papers now get to fly under their own power, he added.
"They were in a bit of a holding pattern for two, three years."
Agreements are being put in place for the exchange of selected content between Groupe Capitales and La Presse, Mr. Crevier said.
Claude Gagnon, head of Gesca's regional newspaper group, will take on the position of chief executive officer of Groupe Capitales, continuing in his role as president and publisher of Le Soleil.