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The distribution deal with Gateway Newstands ‘allowed Metro to not only survive but to thrive and grow’ after its launch in 2000.DARRYL DYCK/The Globe and Mail

Commuters in and around Toronto will wake up to a different free newspaper at subway and train stations next month as Postmedia Network Inc. has inked a deal to supplant Metro Toronto on newsstands across the transit network.

Postmedia won the contract with Gateway Newstands, through the TTC, in a process that was opened up to bidding for the first time after Metro held exclusive distribution for 14 years. The three-year deal should boost the profile of 24 Hrs in Toronto, putting it in the path of more than 1.6 million people who ride the city's public transit system daily.

The move marks a significant shift in the market for free daily newspapers, at a time when advances in digital news and a soft advertising market are already putting pressure on the business model. And it marks a swap in strategies for 24 Hrs and Metro, both of which are trying to adapt to stay viable and reach a new generation of readers.

"You can street hawk or you can have it in Gateway Newstands," said Craig Barnard, senior vice president of reader sales and service for Postmedia Network Inc. "In the underground, at the Gateway stores, right at the trains and so on is a more beneficial distribution network, in our opinion."

The deal will put copies of 24 Hrs in more than 90 TTC and GO Transit stations starting July 2, and Mr. Barnard predicts a circulation boost of 25,000 to 35,000 copies for 24 Hrs. Postmedia acquired the free daily in April as part of a $316-million deal to buy Sun Media Corp.'s English-language publications.

"For 24, it's an opportunity to re-establish itself in a strong way. And at the same time I think Metro … will be very capable of maintaining its brand without the distribution in the subway," said Bill McDonald, the former president of Metro English Canada. "Overall, I think it could have a very positive impact on the free daily category in the Toronto market. And we could even see overall growth in readership."

Metro will still be available outside TTC and GO stations, as the company plans to roll out more than 500 new newspaper boxes and racks throughout the GTA, especially at stops along the western Lakeshore commuter route. It will also introduce "hand promoters" to give copies to transit riders and pedestrians, and boxes on bus routes in the "905 region" that feed into the subway lines, in an effort to reach readers early in their commutes.

The distribution deal with Gateway "allowed Metro to not only survive but to thrive and grow" in the years after its launch in 2000, said Greg Lutes, vice president and group publisher of Metro English Canada, a division of Torstar Corp. Yet late last year, Metro stopped publishing in seven cities from Hamilton to Victoria, and its remaining titles had a difficult first quarter in 2015, due in part to sagging ad revenues.

The rules governing the coveted distribution contract changed when the TTC – pressed by competing media – required that Gateway tender a Request for Proposals, or RFP, for the 2015 contract. In the past, Metro had first right of refusal to renegotiate its deal every few years. It submitted an offer, hoping to keep the contract, but was ultimately outbid by Postmedia.

"We wanted to maintain our revenue stream on this," said Arlene Shepard, vice president of press management for Gateway Newstands, noting that after a long relationship with Metro, "it is significant for us to shift."

Both Postmedia and Torstar positioned their strategies as going after younger readers – a demographic that many advertisers are demanding that newspapers deliver. And the prospect of wireless mobile signals coming to subways – including Wind Mobile's recent announcement to bring cell service to some stations – are a growing threat to print-focused free papers.

Metro Toronto's daily weekday circulation is about 500,000 print copies, according to the latest research from NADbank, or more than twice the 245,000 24 Hrs distributes each day. But it remains to be seen how many readers may change their allegiance.

"The transit commuter is a creature of habit," Ms. Shepard said. "And they'll get in the habit of picking up 24 [Hrs] very quickly, just as they've picked up Metro."