Sun Media is selling its 74 community newspapers in Quebec and associated websites to rival Transcontinental for $75 million as it continues to adjust to a loss of local advertising revenue caused by the digital revolution.
The agreement announced Thursday has been approved by the boards of both companies but the subsidiary of Quebecor Media will continue to operate the papers until the transaction receives regulatory approval, including from the Competition Bureau.
“Advertisers now have a multitude of platforms available to them that did not even exist little more than 10 years ago. We believe in the future of print media but we cannot ignore the new market realities,” said Quebecor Media CEO Robert Depatie.
He said the transaction will ensure that the newspapers will stay in the hands of a Quebec company. Not included in the deal are Quebec’s largest daily newspaper Le Journal de Montreal, Le Journal de Quebec, the 24 Heures free daily and the QMI news agency.
The deal comes a day after Sun Media announced the layoff of another 200 employees across its network, including 50 journalists outside Quebec.
Transcontinental CEO Francois Olivier said the transaction will add about $20 million in operating income before amortization and allow the media company to continue building its multiplatform offerings across the province.
“Acquiring Sun Media’s 74 community papers in Quebec is in line with our strategy to strengthen the core assets of TC Media and develop a local digital media offering for businesses and communities,” he stated.
Quebecor Media also agreed in a separate agreement to print some of its magazines and direct marketing materials with Transcontinental Printing starting in February.
Olivier called the printing deal “historic.”
“On the one hand it shows the relevance of our state-of-the-art printing platform and our ability to help publishers and marketers, and on the other it demonstrates our ability to change in keeping with the new realities of the local media market.”
Transcontinental also announced Thursday that its net losses in the fourth quarter nearly doubled to $92.2 million from $51.9 million a year earlier.
Adjusting for one-time items, it earned $58.2 million, down six per cent from $61.9 million a year earlier. Earnings for the period ended Oct. 31 decreased by two cents per share to 75 cents, beating analyst forecasts by one cent.
Revenues fell 3.2 per cent to $566.3 million from $585.1 million.
For the full year, it lost $14.5 million or 19 cents per share, compared to a loss of $183.3 million or $2.27 per share in the prior year. Adjusted profits increased 5.2 per cent to $157.2 million from $149.4 million. They were up 9.2 per cent on a per share basis to $2.02 from $1.85 in fiscal 2012.
Transcontinental is Canada’s largest printer and a leading media company with magazines, newspapers, books, mass and personalized marketing, mobile applications and door-to-door distribution. It has more than 9,000 employees in Canada and the United States.
