[LINK] Four links on the Postmedia purchase of the English-language properties of Sun Media

[rfmcdonald]

The Canadian Press dealt with the concentration of media ownership this purchase would imply, suggesting that concentration is better than disappearing.

Postmedia’s plans to buy Quebecor’s stable of English-language newspapers and websites may resurrect concerns about whether the concentration of media ownership in Canada will narrow the range of editorial voices the public relies on for information, experts say.

But some say it may be the only way to keep newspapers alive in an industry that’s struggling to survive.

“What we’re talking about here is one threatened company … buying properties whose future was in doubt,” said Ivor Shapiro, chair of the Ryerson School of Journalism in Toronto.

If Calgary has two newspapers with the same owner, so be it, he said. It’s been going on in Vancouver for years, with two papers competing editorially with areas of co-operation on the business side, such as advertising sales.

“That is way better at the end of the day than seeing both of those news organizations close down,” he added.

Jason Kirby of MacLean's reflected a common skepticism that the purchase would change the underlying dynamics.

When you’re an acquisition-hungry newspaper executive preparing to go toe-to-toe with regulators in a country where media concentration has long been a dirty word, it helps to have an even scarier bad guy in the room beside you. And so, as Paul Godfrey, the CEO of Postmedia, made the rounds pitching his company’s deal to buy all of Quebecor’s English-language papers—175 titles in total, including the daily rivals to Postmedia’s papers in Calgary, Edmonton and Ottawa—he did everything he could to conjure up the image of a multi-headed beast hell-bent on destroying Canadian journalism. Devil, thy name is Google, Facebook, Twitter and Yahoo.

In presentations to journalists and analysts that were a dry run for the arguments he’ll be making to the Competition Bureau in the coming months, Godfrey repeatedly referenced “giant, foreign-owned, digital-only companies.” He also called them “behemoths of the digital world” and “foreign-based digital giants . . . swallowing digital revenue away from us.” Newspaper bosses (and magazine ones, for that matter) have long blamed Internet giants for destroying their business by stealing content and luring away advertisers, but Postmedia clearly believes that if the deal is going to get approval from Canada’s competition watchdog, it must raise the rapacious-foreigner threat level to severe.

But Godfrey knows where regulatory posturing ends and the actual business of newspapering in the 21st century begins. “Look, we’re not going to be able to compete with Google or Facebook just because of this deal,” he said. Which raises the question: What’s to be gained when one crippled newspaper company doubles down to buy another? Beyond the adage that misery loves company, the Postmedia merger with Sun Media is a transaction built on equal parts financial engineering and equal parts hopeful—or, perhaps, that should be wishful—thinking.

CBC's Don Pittis agreed with Kirby.

Somehow, time after time, the wily Postmedia president Paul Godfrey has pulled the paper and then the chain away from death's door. Just a year ago, as the Globe and Mail reported, the rating agency Moody's was warning about Postmedia's debt. But somehow the papers struggle on.

A lot of it may be Godfrey's personal force of will. Running Toronto's metropolitan government in the '70s, he certainly learned the skill of herding cats.

But the other signature of Godfrey's deals has been their complexity, including the financing.

Somehow, by casting off some assets and adding assets from somewhere else, building a legal structure here and borrowing money there, the National Post and its fellows survive to print another day. Each time it happens there is a new financing deal. Each time, Godfrey has a new set of reasons why, this time, it will work.

[. . .]

As usual in mergers, "synergy" is one of the purported advantages. It means that the sum of the parts makes a greater whole. But saying the word doesn't make it so. The other advantage cited by those who support mergers is that bigger is better. Godfrey used both those arguments today.

Going back to MacLean's, Martin Patriquen noted that the sale of Sun Media's English-properties by Quebecor, associated with a Pierre Karl Péladeau who has doubled down on separatism, might signal things about Péladeau's hopes for the Québec political scene.

It is often difficult to tell what is business and what is personal in matters concerning Pierre Karl Péladeau. The scion of Quebecor, long one of the country’s largest media concerns, has his father’s fiery temperament but not his ability to keep impudence in check. Take, for example, Quebecor’s acquisition of the Sun Media newspaper chain in 1998, the very chain Quebecor has unloaded (pending approval from the Competition Bureau) to Postmedia this morning for $316 million.

Formulated the weeks before Christmas 1998, that deal saw Quebecor nip Sun Media from the jaws of Torstar with a sweet deal indeed: $21 a share, or nearly $983 million—considerably more than TorStar’s $748-million takeover attempt three months before.

It was a princely sum, even in pre-Internet days when content was sold on paper, not given away on a screen. Already, the TorStar/Quebecor war had inflated the share price from $16, with TorStar unwilling to go higher than $19. The previous incarnation of Quebecor, led by its founder, Pierre Péladeau Sr., would have balked even at this amount. Indeed, one of Péladeau Sr.’s last major business decisions was to turn his nose up at a $411-million offer for Sun Media cooked up by his senior management in 1996.

But the 1998 version of Quebecor, led by Péladeau fils, was an entirely different beast. His father passed away in 1997, bringing an end to a frankly awful relationship; the pair reportedly weren’t even on speaking terms in the months before Péladeau Sr.’s death. PKP wanted to put his stamp on the company, and Sun Media was the sweetest of plums.

Acquiring the newspaper chain gave Quebecor instant national clout—and cowed the chain’s own anti-Quebec bias. No longer would its loudest voices be able to bash Quebec with abandon. If any of Péladeau’s new minions referred to PKP’s father as a “separatist, anti-Semite and ex-alcoholic,” as Diane Francis did in the Sun-owned Financial Post in 1996, they would find themselves on the curb in a hurry.