Quebecor Inc. chief executive Pierre Karl Peladeau has taken personal control of Sun Media Corp. and the Canoe online operation after the newspaper sector reported “disappointing” third-quarter results.
“The newspaper business is certainly not a growth business but that doesn’t mean it’s not an interesting business,” Peladeau said Friday.
The print segment delivers content that Quebecor has used in its various media holdings as part of its convergence strategy, he told a conference call.
Peladeau replaces Sun Media president Michael Sifton, who had been given the job in September 2007 after Quebecor’s takeover of his Osprey group of Ontario newspapers.
The media company’s newspaper assets have been hit by declining advertising revenues in Canada’s largest province.
“The majority of the advertising revenues decline was experienced in the Ontario operations where the economic conditions continue to be weaker than the other provinces,” Peladeau told analysts.
Sun Media revenues fell 2.3% as advertising revenue dropped 3.2%. Osprey revenue was down 8.8%, but advertising in free dailies increased 12.1%. Newspaper operating income decreased 13.3% to $52.1 million.
Peladeau said the integration of Sun Media and Canoe under one leader “will help to maximize growth opportunities and synergies, and accelerate the migration of information and content generated by the various publications to cross-platform supports.”
Sifton said he was “happy to have been given the opportunity” to integrate Osprey in the Sun Media organization.
Despite the challenging newspaper market, Quebecor earned $45.6 million in the period ended Sept. 30, reversing a loss of $35.2 million a year earlier.
Revenue increased by $73.5 million, or 8.8%, to $908.1 million, with the improvement driven by the Vidéotron subsidiary, Quebec’s largest cable-TV operator.
Cable-segment operating income grew 17% to $201 million, and Quebecor confirmed plans to spend between $800 million and $1 billion over four years to build out a wireless network. This includes $554.6 million for operating licences.
Peladeau said he wasn’t pleased with the company’s performance.
“Rigorous actions are necessary in order to adapt our business model to a slowing economy and structural shift in the industry. I can assure you that this is a top priority for our organization.”
RBC Capital Markets analyst Drew McReynolds said Quebecor’s results were mixed. Vidéotron’s growth has slowed with softer-than-expected revenue offset by better margins.
The cable division had strong digital additions but lower telephone adds. Although Quebecor has made margin stabilization a priority in the newspaper segment, McReynolds wrote in a report, that will be difficult to achieve “given our expectations for a more severe downturn in newspaper advertising this cycle.”
