In the wake of Postmedia’s $316 million acquisition of Sun Media’s 175 English language print and digital properties, president and CEO Paul Godfrey on:
Why Postmedia is buying newspapers in a shrinking print market
“We’re not just buying a well-known newspaper brand in the name of Sun Media. We are evolving into a news media company, with one print and three digital platforms: web, smartphone and tablet.
Besides the Sun Media newspapers, their digital properties are incredibly important. Digital audiences are unbelievably valuable to this strategic acquisition. Over time, our hope is that Canoe and all other related websites may very well become the jewel of the deal.
Scale is important, especially in the digital world. This acquisition makes us the largest digital news and information organization in the country, with more than 12 million unique visitors per month.”
Plans to increase digital revenues and better compete with established online giants
“There’s no doubt all newspaper revenues are coming down, it doesn’t matter where – we believe that the merger is necessary to help with the overall situation. Our revenues in digital will be going up, mainly because we now have greater scale.
We’re not going to be able to compete with Google and Facebook just because of this deal alone. We’re setting the stage for increased revenues coming in because of this, and I think over time we will be able to compete.
I think both newspaper organizations could flounder without [the deal].”
Plans for two-paper markets like Calgary and Edmonton, where Postmedia would operate the Calgary Herald and Edmonton Journal broadsheets in addition to the Sun tabloids
“We intend to keep both papers open. We will have two separate newsrooms [and] they’ll have their own editorial opinions. We realize the demographics of the readership are different, and I have some knowledge of those [Sun] newspapers as well as those I operate at the present time. I think they can co-exist and help each other.”
What the deal means for Quebecor’s all-news TV channel, Sun News Network
“Postmedia will own the Sun brand, including the logo. “We will give Quebecor exclusive rights [to the name]. They will have a year to change their logo to differentiate it from the Sun newspaper chain.”
Possible newspaper closures…
“We intend to keep Sun Media’s large daily newspapers open in those markets where we overlap. Their readers and their advertisers in many cases are different from those of Postmedia.
We already have a time-proven model where we own and operate two newspapers in the Vancouver market, and we have for more than 30 years – namely the Province and the Sun.”
… or staff cuts
“It’s too early to answer.
There are some properties that…during our due diligence period we thought that they became too thin and need some boosting [of staff]. When you do due diligence you only get a snapshot of what the numbers look like.
We’ve made a commitment that our plan is to keep the newspapers going. We have [no plans] to close anything; in fact we’ve made a commitment that in the markets where we do overlap we’re definitely going to keep [papers] open. Our intent is to keep everything open today.”
The revenue prospects for the new Postmedia
“Print advertising, a major source of revenue, has been in decline for several years. Digital revenue growth has not been sufficient to replace what has been lost in print. Our ability to compete and achieve a more substantial market share of digital is essential. This is what makes this transaction very appealing to us.
But even with the challenges, newspapers are still the creators of the most reliable, detailed and accurate journalism this country relies on. The broadcast sector also relies on newspapers as the initial source of much of their content.
We believe that this industry is much stronger with the Sun and Postmedia brands together than apart.
Competing with behemoths of the digital world requires a greater and more compelling offering to marketers than rival foreign players. We must make these changes now, so we can be positioned to effectively compete in this rapidly changing media environment.”
On possible future acquisitions
“My focus is on the Competition Bureau to make sure this deal gets completed. I don’t want to stare into a crystal ball at this point in time and speculate on what could happen in the future. I find the real world is difficult enough to speculate on, never mind the world ahead.
Industries change very quickly. A couple of years ago I wouldn’t have fathomed that this deal would come together, so I just want to focus on the real world today.”
On the likelihood that the Competition Bureau will approve the deal
“The world has changed dramatically since 1999 [when Torstar made a failed bid for the Sun Media assets].”
If in 1999 I mentioned the name Google or Facebook, or Twitter, or Yahoo, I think people would have looked at me very strangely – just the concept of those names. I think the world’s dramatically different; newspapers aren’t competitors with other newspapers anywhere close to where they were.
In fact I don’t think of other newspapers as competitors at all – it’s Google and Facebook and every other major website that’s in charge of all the digital revenue they’re [taking] away from us.”
We made the Competition Bureau aware that this was coming. We don’t believe in surprising people at the last moment, so Quebecor and Postmedia informed the Competition Bureau that there was quite a good possibility that this deal was going to proceed, and they should be ready for an application.”
