Postmedia Network Canada Corp. has struck a deal to buy 175 English-language newspapers, specialty publications and digital properties from Quebecor Inc., which is the current owner of the Sun newspaper chain. Here are five things to know about the sale:
Which papers are involved?
The sale, if approved by regulators, will see Postmedia acquire the Sun dailies in Toronto, Ottawa, Calgary, Edmonton and Winnipeg, as well as the London Free Press, the free 24 Hours commuter papers in Toronto and Vancouver, and more than 160 community newspapers, trade publications and magazines. The company also gets the English-language Canoe portal, outside of Quebec.
Currently, Postmedia owns a large stable of publications including the National Post, Ottawa Citizen, Calgary Herald, Edmonton Journal, Vancouver Sun and The Province, also in Vancouver.
How big is the Sun Media chain of English newspapers?
Sun Media Corp. currently publishes 15.1 million copies of paid and free newspapers each week, including a number of French publications not included in this deal. There are approximately 2,400 full-time employees at the publications and properties that are part of the sale.
What's the purchase price?
Postmedia is paying $316-million, less a $10-million adjustment related to real estate. The company plans to finance the purchase by issuing $140-million in new debt and raise $186-million in equity through a rights offering of subscription receipts.
What about competition in major cities?
In a statement, Postmedia says it intends "to keep open all of the major market daily newspapers in the Sun Media portfolio." That means, if successful, Sun and Postmedia papers would operate side by side in Calgary, Edmonton, Vancouver and Ottawa. But the sale is still subject to approval from the Competition Bureau.
Within two years, Postmedia expects the purchase will yield cost savings of $6-million to $10-million per year. But it also includes more than one million square feet of real estate.
In an internal memo, Postmedia president and CEO Paul Godfrey told employees: "In order to survive and compete against the largest foreign-based digital businesses, we must be strong enough to fight and win." The deal, if approved, would give Postmedia the ability to "offer advertisers the opportunity to reach the full scale and scope of their target audiences with a Canadian option for their marketing programs," he said.
Pierre Dion, president and CEO of Quebecor Inc., said in a statement that "newspaper revenues have been declining year by year," and that "Postmedia possesses extensive expertise and the ability and will to invest in these publications' long-term development."