TC Media’s purchase of 74 community newspapers from Sun Media last week not only strengthens its robust community newspaper portfolio, but further complements its local digital strategy, says a company spokesperson. The $75 million acquisition makes sense in the context of the latest “This Year, Next Year” advertising expenditures report from global ad giant GroupM, which said that Canada’s size is largely helping to protect local media revenue.
TC currently owns 83 community papers in Quebec and another 43 papers – including several small dailies – in the Atlantic Provinces and Saskatchewan. The latest deal is subject to approval by the Competition Bureau.
“It’s really addressing our two-fold strategy of strengthening existing assets and developing new revenue streams,” said Jennifer McCaughey, senior director of investor relations and external corporate communications with TC Media parent Transcontinental Inc. in Montreal. “We’ve said for many years that our strategy is to strengthen existing assets and develop new revenue streams. So this really fits into both of those.”
If approved, the deal is expected to add $20 million a year in operating profit for Transcontinental. That will be generated through a combination of newspaper revenues as well as printing contracts for several Quebecor magazines and marketing material for the company’s cable unit, Vidéotron.
TC has invested heavily in locally focused products in recent years, including the job search site JobGo.ca (launched in partnership with Brunswick News) and a variety of SEO/SEM-focused products. It also operates the “Ad Bag” flyer distribution business, which bundles community papers with flyers and distributes them to more than 3 million households throughout Quebec. The strategy is to bundle all of its local services for advertisers said McCaughey.
“We’re really going to get economies of scale through this transaction,” she said. “We have people on the ground in all of these communities that talk to these customers every week.”
While the financial plight of the newspaper industry has been well documented, McCaughey said the community sector has been largely immune (until recently) to the forces impacting major metropolitan dailies across the country.
“We feel the local newspapers will be less affected than the urban papers, because they’re the only place you can get local news,” said McCaughey. “You’re not going to find out what happened in a little town in Quebec in The Globe and Mail.
“It’s a completely different market, and we believe it’s much more sustainable,” she added. “People are saying print is dead, but our strategy is to focus on niches we think have a greater opportunity and are less affected by electronic [media].”
McCaughey said that the approach has manifested itself throughout the company. Last year, for example, Transcontinental sold its book printing business to Marquis Book Printing for an undisclosed price, but opted to keep its textbook printing business.
There are indications that even local advertising might not escape the financial pressures impacting traditional media entirely unscathed, however. While McCaughey said that TC Media’s local revenues have traditionally fluctuated between a 2% increase/decrease on a year-over-year basis, the decline was more pronounced this year because of a soft advertising market.
“It’s a little hard to say if it’s customers postponing their spending, cutting it completely or transferring it to digital,” said McCaughey. “It’s a little hard to gauge.”
