Business

WAR OF WORDS

The gloves are off over circulation claims in the newspaper industry

Anthony Wilson-Smith February 8 1999
Business

WAR OF WORDS

The gloves are off over circulation claims in the newspaper industry

Anthony Wilson-Smith February 8 1999

WAR OF WORDS

Business

The gloves are off over circulation claims in the newspaper industry

ANTHONY WILSON-SMITH

Among the executives who oversee some of Canada’s largest competing newspapers, personal relations have been a curious mix between cozy and confrontational. Stuart Garner, the chief executive officer of Thomson Newspapers—which owns The Globe and Mail—has been involved in a series of business transactions over the years with David Radler, the deputy chairman of Southam Inc. Several times last year, when Southam was preparing to launch the National Post, Garner telephoned Radler to needle him, as he gleefully recounts, by saying “he was dreaming with his financial projections, and that their paper would do much worse.” Still, Garner described Radler as “a smart chap who can dish it out, and take it.” And last December, when Phillip Crawley was appointed as the president of the Globe, he received a call from Don Babick, publisher of the Post, inviting him to lunch. The two went to Biagio’s, an upscale Toronto Italian restaurant, and both say they got along well.

That was then—but now, a burgeoning newspaper war between

the two rivals has suddenly made pleasantries less frequent. One reason is the claim—made by the Posts Babick last week—that his three-month-old newspaper is attracting an average daily circulation of 272,000 copies and outselling the Globe in most major metropolitan markets outside Toronto. If that is the case, it would put the Post within striking distance of the Globe, which claims to be selling 330,000 copies daily, and threaten the older publication’s hold on the national newspaper advertising market. In fact, said Babick, in a speech before the Advertising Club of Toronto, “these figures show there is room for a new national newspaper in Canada.” That prompted scathing public comments in two speeches by Crawley, a well-travelled but recently arrived native of England who once worked for Post owner Conrad Black. His targets ranged from questioning the legitimacy of the Posts cut-priced-circulation figures to the “remarkably lax” standards by which the entire Canadian newspaper industry measures circulation. Said Crawley, in his remarks to the same group: “I’ve worked in various parts of the world in my 30-odd years in the newspaper business—and I have never seen [circulation] rules as relaxed as they now are in Canada.” And, he added, in a speech the following day in Vancouver that compared the Globe to the Post: “We are a newspaper, not a newsletter. That’s a big point of difference.” In a later Maclean’s interview, Babick responded: “I’m not sure what the purpose of Phillip’s criticisms are, but he might wantto apply some of those remarks to his own newspaper.”

THE OPINIONATED MAN OF THE GLOBE

Shortly after Phillip Crawley became president of The Globe and Mail last fall, he sent a memo to editor-in-chief William Thorsell complaining about travel section stories that emphasized “exotic” or “gay” themes. That, Crawley said, ran counter to the wishes of Globe advertisers, who prefer family-oriented fare. When the memo was leaked to the gossip magazine Frank, Globe journalists were horrified at what they saw as a moneydriven attempt to influence editorial content. But Crawley, 54,was unapologetic, saying in the aftermath: “You will note that our most recent feature dealt with how to take your kids to Las Vegas.” Last week, he had lunch with Bob White, the senior vice-president of the Audit Bureau of Circulations. The next day, in a speech at the Advertising Club of Toronto—with White serving as host—Crawley

ridiculed ABC’s circulation measuring system. Said a shocked White: “He gave me no warning.”

Then, at Vancouver’s Canadian Club the following day, Crawley went after the National Post, saying that owner Conrad Black uses the newspaper as “a pulpit for his views,” which include his “mission to reinvigorate the right in Canada [and] to rescue the reputation of Brian Mulroney.”

In Canadian newspaper circles, such talk usually isn’t done in public— or at all. But the British-born Crawley, a fierce and fit competitor at tennis and running, is a veteran of newspapers in places that play by different rules, including London’s Fleet Street, Hong Kong and New Zealand. Over three decades, his bosses have included Black—when Crawley was at The Dally Telegraph—and Rupert Murdoch, when Crawley was editor-in-chief of the then-Murdoch-owned South China Morning Post in the early 1990s.

Crawley’s link to the Globe is Stuart Garner, a fellow Briton and longtime acquaintance who heads Thomson's

newspaper division. Since Crawley’s hiring, he has taken charge of day-today duties from publisher Roger Parkinson, an American, and, as of last week, appears to be supplanting him as the public face and voice of the newspaper.

Within the relatively genteel confines of the Globe newsroom, Crawley is regarded with both fear and favour. The enthusiasm comes because he has increased editorial spending, sharpened the focus on hard-news coverage, and heightened the profile of foreign correspondents, whose role at the paper had been diminished. After a recent meeting with the paper’s Ottawa bureau, one staffer said: "He knew who we are, what we do, and what should be better." Crawley, who is married with three children, knows his shortcomings— such as his unfamiliarity with Canada, a country he had visited for all of two weeks before moving here. “I make it a point to acknowledge what I don't know,” he says. And, otherwise, to leave no doubt about his opinions.

A.W-S.

Welcome to ground zero in Canada’s Battle of the Newspaper Titans—a place in which no one can agree on much of anything, beginning with the rules of engagement. As well, the players on each side keep changing in the wake of a year of trades and takeovers that has seen Thomson, Southam, Torstar (owners of The Toronto Star) and Montreal-based Quebecor all moving to consolidate their holds on respective segments of the market. While the Globe and Post battle, the fallout will affect the entire industry and the standards it uses to measure success.

As always, the most heated battle is in the Greater Toronto Area—home to 4.3 million people and 36 per cent of Canada’s retailtrade market. There, the runaway market leader is The Toronto Star, overseen by its high-profile, perennially bow-tied publisher John Honderich, followed by The Toronto Sun, while the two national papers trail well behind. In interviews, both Jim Travers, executive managing editor of the Star, and Doug Knight, publisher of the Sun, pointed to gains in areas of circulation that each said came at the expense of the other.

According to the most recent Audit Bureau of Circulations, or ABC, figures, the Star remains the country’s biggest newspaper, with an average Monday to Friday circulation of 458,000 and Saturday sales averaging 703,400. The Sun sells 240,000 papers on an average weekday and its biggest newspaper, on Sundays, sells 407,500. Within the GTA, Babick says, the Post is “just closing in on 100,000 copies” daily. The weekday Globe, according to its internal figures, sells about 205,000 in Ontario; about 130,000 are in the GTA

But almost all of those numbers are open to different interpreta-

tions, and challenges. The Globe, through Crawley, is particularly angry with controversial changes agreed upon at an August meeting with ABC—the traditional bible of the industry. The new rules, which for the first time differ from those in the United States, allow newspapers to include sales at costs as low as one cent a copy in their circulation figures. (That change was also fought by the Sun’s Knight: his newspaper, which does not offer weekday home delivery, sells almost all of its copies at full newsstand price.) For its part, the Post offers a special rate of $6 a month for home delivery to anyone subscribing to other Southam papers; that rate is a fraction of what it would cost at the newsstand. (Until last year, bulk sales could be counted only if their cost was at least half the newsstand price.) That, says Crawley, “means you can claim any circulation you want if you virtually give your paper away.”

But many critics say Crawley is the wrong person to make that point, because the Globe quit ABC in the mid-1980s. The reason for doing so, industry sources say, was precisely the same tactic as Crawley accuses the Post of practising: it wanted to offer huge discounts to airlines and hotels to boost circulation, and was unhappy that those sales would not be included in its figures. Says Bob White, the senior vice-president of ABC Canada: “The complaints they make about us are true of them—and no one can even verify any of their claims.” ABC, in fact, will be listing distinctions between different prices charged in its circulation figures—but most members are near-certain to tout the overall rate in public.

For now, the Posts claims are, like those of the Globe’s, the result of its own studies. Its start-up came too late for it to be included in ABC’s 1998 year-end figures. Instead, its circulation estimates are based on a study conducted for the paper by the Angus Reid Group research company at the end of last year.

But many people say that the real benchmark for the Post will be the release of the fall NADbank numbers, an independent study that measures time spent reading each paper. Until that time, says Ann Boden, the president of Toronto-based OMD Canada, the country’s largest media-buying firm, “the reality is that neither side can claim hard-and-fast numbers. The next numbers will be very interesting.” The stakes are enormous, since circulation figures largely determine the rates that newspapers charge advertisers. At present, a full-page, black-and-white ad running in the Globe would cost a regular client $32,700, while a similar ad in the Post is $28,900 and in the Star $24,600. The Sun, a tabloid with a smaller page size, costs $5,750.

While Canadian newspapers compete with growing intensity, the teams that some of them play for keep changing. In a six-month space last year for example, two southern Ontario papers—The Hamilton Spectator and The Record of Kitchener-Waterloo—were traded by Southam to Sun Media. They then appeared destined for Quebecor when it bought out Sun Media, and finally, in a later transaction, were sold by Quebecor to Torstar, along with two smaller southern Ontario dailies.

On each occasion, that meant a change in important editorial content, such as the use of syndicated political columnists.

For its part, Southam acquired The Financial Post from Sun Media, and expanded it into the present Post. Recently,

Black moved to turn Southam into a privately held company by increasing shares held by his Holfinger Inc. to 97 per cent.

Then, there was the change that almost took place: Torstar’s hostile $900-milfion bid for Sun Media that eventually resulted in Quebecor’s friendly $1.3-billion purchase. That move gives Quebecor, in addition to its two French-language newspapers in Montreal and Quebec City, a near-national network of English-language dailies that includes four in Alberta, two in Manitoba, five in Ontario, and one (The Record of Sherbrooke) in Quebec. This

THE NUMBERS GAME Average weekday circulation National Post* 272,000 The Globe and Mail* 330,000 The Toronto Star** 458,000 The Toronto Sun * * 240,000 * Unaudited ** Audit Bureau of Circulations Canada Rate for a full-page ad (black and white) National Post $28,900 The Globe and Mail* $32,700 The Toronto Star $24,600 The Toronto Sun $5,750 * National rate

year, the turnover pace is likely to be slower. But some observers believe that Thomson, which owns eight newspapers in Canada, wants to divest itself of most, with the exception of the highly profitable Globe. If that happens, the hottest property would be the Winnipeg Free Press, which would likely be sought by Southam and Torstar.

Almost inevitably, those moves have caused dramatic changes in the editorial environment in many newspapers. Most of the talk— much of it favourable—within advertising and editorial circles has centred on the Post, which has established a distinctive personality through its vast collection of talented, collectively grumpy, devoutly conservative and relatively young journalistic staff. Much of its reporting abandons the North American tradition of neutrality in favour of the more British style of taking points of view: that approach, though criticized by some, has been praised by others for contributing to more evocative, decisive writing than in most Canadian papers.

In fact, the newspaper has shown almost messianic zeal in pursuing certain issues: one senior Southam editor jokes that the Post’s ideal dream story and photograph would involve “a bikini-clad woman leaving a United Alternative meeting en route to a rally to impeach Bill Clinton.” And Honderich, whose newspaper is the sole left-leaning major English-language newspaper, has observed dryly to associates that “it is not as though there was any shortage before this of right-wing voices.” But even detractors acknowledge that Post editor Ken Whyte has shown a strong sense of vision in ferreting out offbeat stories and looking at more traditional stories through a different prism. As well, many business observers say, the beefed-up Financial Post—transformed from a tabloid publication into a broadsheet section—is easily the equal of the Globe’s vaunted Report on Business. Boden, who initially criticized the paper as “disappointing,” now says: “Everyone I know is reading it, and liking it. It offers readers a lot of value for the money.”

Another reason for that is its paucity of ads: while newspapers usually offer a mix of about 60 -percent editorial copy to 40 -per-cent ads, Babick acknowledges that the Post’s average on some days is closer to 80-per-cent editorial to 20-per-cent advertising. And the Posts apparent early success with readers could have a downside for some fellow Southam papers. In Ottawa, more than $1 million was spent in the past two years on editorial improvements to give The Citizen a more upscale presentation. Southam sources suggest the paper’s circulation did not budge—and that it may actually be declining as some readers switch to the Post, which covers much the same ground.

For their part, even Globe employees say the arrival of the Post has sharpened their own focus.

Since it began publishing, the Globe has chopped its price in the Atlantic provinces from as high as $1 on weekdays to 50 cents, and added a third section to its national edition. Editorially, over the last year, it has increased the space given its foreign bureaus, dramatically expanded its sports section and West Coast bureau, and hired more than a dozen new reporters, editors and columnists. Meanwhile, Globe officials say that their volume of advertising is as strong as ever.

Even before the arrival of the Post last October, other competitors were bulking up for the fight. The Star and The Toronto Sun, already at war with each other, spent millions on hiring new staff and paying out bonuses and increases to keep their most talented journalists. The Star hired more than 40 new journalists in the last year, bringing its total number of writers and editors to 418. The paper completely revamped its Sunday edition, expanded some of

its Saturday features, and under Travers—a no-nonsense, former foreign correspondent—has built up its Ottawa and Queen’s Park coverage and sharpened its focus on hard news. But most of all, says Travers, “our strength is that we cover Metropolitan Toronto bigger and better than anybody else, and that’s where our real energy goes.” At the Sun, Knight says: ‘We are the newspaper of

the alpha male: if you want to know everything on sports, or crime or justice issues, there is no other paper that will give you as much.” Because of that, says Knight, the takeover of Sun Media by Québécor “is a perfect fit, because their formula in French is the same as ours in English.”

Still, Quebecor’s bite may be felt elsewhere in the Sun chain. The company is renowned for demanding unusually high returns on its investments, and for tight cost-control measures that run counter to Sun Media’s more free-spending traditions. Even though the takeover is barely complete, reporters at The Calgary Sun, for one, say that as part of new cost-control measures, they have been told to use cell phones only in emergencies, to ask for news releases to be sent by e-mail, rather than fax, to save on paper costs, and to limit long-distance calls wherever possible.

But overall, the changes on the journalistic landscape—coupled with newsprint prices that may drop by up to 25 per cent in the coming year—leave most people associated with the industry buoyant. “Everyone used to talk about the death of newspapers,” says Boden. “Now, everybody is just plain talking about newspapers.”

In the case of the Post-Globe war, Babick and Crawley agree on at least one thing. Says Babick: “When you look at our progress, remember that a newspaper is measured in years, not days.” And, acknowledges Crawley of Black: “He is not a man who gives up. I expect the Post is here for the long haul.” If so, in person and in print, the war of words is just beginning. □