Postmedia Network has formally closed on its acquisition of Sun Media Corporation’s English language assets, less than three weeks after the Competition Bureau announced that it would not oppose last year’s $316 million transaction with Quebecor Media.
The deal adds 175 new brands and 2,500 employees to Postmedia, which last week reported a second quarter loss of $58.2 million on revenues of $145.4 million – down from $162.5 million in the corresponding year-earlier period.
The purchase includes the Sun family of newspapers, as well as The London Free Press and 24 Hours products in Toronto and Vancouver. It also includes the English-language Canoe portal.
The addition of the Sun Media properties to existing Postmedia assets creates unprecedented newspaper consolidation in several of the country’s major media markets, but the Competition Bureau’s reluctance to nix the deal appears to underscore the precipitous decline of the daily newspaper industry in recent years.
Postmedia will now control both major dailies in several markets, including Calgary (the Herald and Sun), Edmonton (the Journal and Sun) and Ottawa (the Citizen and Sun). In Toronto, it will control two of the four major dailies in the National Post and Toronto Sun, as well as the free commuter product 24 Hours.
Postmedia president and CEO Paul Godfrey has stated the company intends to keep the newsrooms separate, but has acknowledged that it’s unlikely the deal would have been approved 10 or 20 years ago, before the internet began eroding daily newspaper readership and advertising.
Bob Reaume, vice-president, policy and research with the Association of Canadian Advertisers (ACA) in Toronto, said his organization spoke with the Competition Bureau prior to its recent decision.
While the ACA remained neutral, Reaume said it did alert the Competition Bureau to the “monopolistic” situation in the three markets. However, the group also noted the Sun Media acquisition had the potential to make Postmedia’s online product more robust.
Reaume also noted advertisers have dealt with a monopolistic situation in Vancouver – where both The Vancouver Sun and The Province are owned by Postmedia – for “many, many years.”
“We’re not surprised this was the final outcome,” said Reaume. “We wish them well, and we hope they use their new-found market freedom and dominance in those three markets in a responsible manner.”
Asked if the ACA had any misgivings about potential rate hikes as a result of Postmedia’s market dominance, Reaume said the current media environment will dictate how aggressive it can be. “We’re always concerned about rate increases, but I think we can be pretty assured it’s low-risk in this situation,” he said.
Postmedia said the 16% decline in print advertising revenue last quarter came across all categories, including national, local and insert. Print circulation revenue decreased $2 million, while digital revenue decreased $600,000 from the corresponding year-earlier period.
