Transcontinental bets on local with sale of consumer titles

Company focuses on maintaining its competitive advantage

More than 30 years after entering the consumer magazine business and becoming one of the industry’s biggest publishers, Transcontinental‘s sale of 15 titles to Quebecor Media’s TVA Group signals a major shift in strategy after for the Montreal-based company.

This week’s $55.5-million deal, which still needs regulatory approval, includes several marquee titles including Canadian Living, Coup de Pouce, Style at Home and The Hockey News. The publications employ approximately 310 people in Toronto and Montreal.

Transcontinental retains two Western Canadian titles, Vancouver Magazine and Western Living.

The deal is part of a trend towards continued consolidation within Canada’s print media industry, following deals such as Quebecor’s recent sale of its Sun Media chain to Postmedia.

In a research note issued Monday, RBC Capital Markets said consolidation is necessary for publishers to address legacy costs and develop competitive digital offerings. The acquisition aligns with Quebecor’s stated strategy of investing in the “production and distribution of high-quality, rich, diverse entertainment and news media content.”

It said the overlap with TVA’s magazine business, which includes such titles as 7 Jours, TV Hebdo, Le Lundi, and Clin d’oeil, is likely to produce “significant” synergies. TVA said Monday the transaction would contribute between $10 and $14 million in annual earnings.

Quebecor Media did not respond to interview requests.

Katherine Chartrand, Transcontinental’s Montreal-based director of internal and external communications, told Marketing the sale furthers the company’s strategic focus on segments capable of giving the company a sustainable competitive advantage, and that offer key differentiating factors.

She said local advertising through its approximately 180 publications in Quebec, Ontario, Saskatchewan and the Atlantic provinces would provide Transcontinental’s TC Media division more business opportunities.

Chartrand said the company is also committed to further developing its digital solutions strategy, building on its existing flyer distribution capabilities through its Publi-Sac product.

While a Competition Bureau decision on the sale is not expected for several weeks, possibly months, Chartrand said the sale would usher in a “different direction” for Transcontinental’s TC Media division.

“We’ve refocused our efforts on local markets and our [retail partners] but we continue producing and delivering specialized content for business publications. We’re also one of the leaders in French-language publishing in the book market, so we’re going to continue leveraging those assets in the future,” she said. “It’s early to say what will happen in the next few months and years, but this is our direction moving forward.”

Chartrand said Transcontinental first began discussions about selling the titles in the late summer, with several unidentified media groups expressing an interest in acquiring the titles.

“We took steps to really maximize the value of our brands and ensure that we had a satisfactory agreement for both parties,” said Chartrand, who said there were “several factors” that led to the decision to sell to TVA Group.

“They really do have a strategy that’s geared towards entertainment and information,” she said.

Chartrand said despite stable readership, its stable of consumer titles – including The Hockey News, Canadian Living and Coup de Pouce – are facing “some challenges” in a changing advertising climate.

“Most of the brands grew their audience with all of the platforms, so it was not really a question of audience,” she said. “It was more pressure on advertising dollars and the fact advertisers have to split their dollars to reach their audience on several platforms. For us it’s just lower ad revenues combined with higher costs to deliver content on multiple platforms.

As part of the deal, Transcontinental will retain the printing contract for the consumer magazines through 2022.

Transcontinental’s publishing history dates back to the 1979 creation of Transcontinental Publications with the purchase of weekly business newspaper Les Affaires and sister magazine SIC (now Affaires PLUS).

The company continued adding to its consumer magazine business throughout the 1980s and ‘90s, with the launch and acquisition of titles including The Hockey News (purchased in 1986), Décormag and Le Bel Age (1988) and Good Times (1989).

It established itself as the country’s largest consumer magazine publisher in 2000, when it purchased 11 Telemedia consumer titles – including Canadian Living, Style at Home and the now defunct Homemakers/Madame au Foyer – for a reported $150 million.

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