TORSTAR HEATS UP NEWSPAPER WARS
By Adnews Staff
Just when you had your eye on Southam Inc.'s National Post to see how it would fare in the newspaper industry in Canada, Torstar Corp. slipped by and offered to buy Sun Media Corp. of Toronto for $748 million. The move would give Torstar 26% of the total daily newspaper circulation in Canada, compared to Hollinger-Southam's 42%. Under the deal, Sun Media would operate as a separate division with its own editorial and market focus. "This initiative is good for both companies," Torstar Corp. president and CEO David Galloway says in a release. "It strengthens the long-term position of two of the most distinctive voices on the Canadian print media scene today and creates an exciting platform for future growth." The deal is conditional on Torstar Corp. acquiring at 66 2/3 per cent of all outstanding Sun Media's common shares on a fully diluted basis and regulatory approval. Sun Media will consider the offer shortly. Torstar's operations include The Toronto Star, Metroland Printing, Publishing & Distributing and Harlequin Enterprises. In addition, the company publishes 50 community newspapers and has a 30% stake in ITI Education. Sun Media publishes seven daily newspapers in major urban centres, eight daily community newspapers and 115 community and specialty publications in Canada and Florida. Its electronic assets include a 60% interest in Canadian Online Explorer and a 30% stake in CablePulse24.
To help fund the transaction, Torstar has put its Children's Supplementary Educational Publishing division up for sale. The division consists of seven U.S. companies with about 1,000 employees and annual revenues of over $300 million.
Torstar's earnings for the third quarter ending Sept. 30 rose 21% to $16.7 million, compared to the same period last year. Newspaper profits dropped from $11.3 million to $10.3 million due to increased promotion costs and lower lineage results in The Toronto Star. The Toronto Star's third quarter profit declined from $4.9 million to $2 million. National advertising was up 15%, but retail and property advertising were down 8% and 4% respectively. Metroland's operating profit rose 11%, while revenues increased by 10%. Overall, earnings for the first nine months of the year jumped 13% to $67.9 million.