The day the news caught fire

Doug Fetherling September 8 1980

The day the news caught fire

Doug Fetherling September 8 1980

The day the news caught fire


Doug Fetherling

It’s already going down in the history of the newspaper business as Black Wednesday, but it was more than that—it was the day when all the rumors finally came true. Within just 11 hours last week, a fabulous epoch in Canadian journalism came to an end— along with at least two large daily papers, The Winnipeg Tribune and the Ottawa Journal, and the jobs of 800 employees. Of more permanent and dangerous import was the naked fact that the rivalry between the industry’s two monoliths, Thomson Newspapers Ltd. and Southam Inc., ceased to exist. As the fine-line syntax of newspaper stylebooks would have it, everybody was surprised but no one amazed. The writing had long been on the wall, though few seemed able—or willing—to decipher it until it was too late.

Ever since Kenneth Thomson emerged victorious last January from a seven-week bidding war for ownership of FP Publications Ltd., observers within and without the business had wondered what he would do with his prize. Their opinions placed them in two different camps. First were those optimists who thought that genetics didn’t matter, that the present Lord Thomson of Fleet would eschew the ways of his late father, Roy Thomson, and begin a new era of vigorous publishing competition in selected centres across the country. After all, Thomson (oil, department stores and about 130 other newspapers on this continent alone) is the richest man in Canada. Hope persisted somehow that he would take a cue from Orson Welles’ Charles Foster Kane: (“You’re right. We did lose a million dollars last year. We expect to lose a million next year, too. At the rate of a million a year we’ll have to close this place—in 60 years.”) And then there were the pessimists.

The pessimistic view was that all Thomson wanted out of the FP deal was the Toronto Globe and Mail with its influence and prestige, that it would become some sort of national Gargantua, that the five other papers would be sold off or shut down if buyers couldn’t be found. This was an interpretation that quickly gained credence as the months wore on. In June, Thomson sold the chronically anemic Calgary Albertan to the Toronto Sun Publishing Corp., which transformed it into The Calgary Sun, the third in its tabloid mini-chain which also includes Suns in Toronto and

Edmonton. In July he announced that his two Victoria papers, the Victoria Times and The Daily Colonist, would merge as a new entity to be called the Times-Colonist (see page 64). But even those acts—and the more recent scuttlebutt that Southam was antsy to break up Pacific Press Ltd., a partnership by which it pooled overhead with Thomson on the two Vancouver dail-

ies—sounded the mildest of alarms. The feeling persisted that Thomson would sit back and take time to consider the fate of the Ottawa Journal which, despite continual losses, was finally beginning to come abreast of Southam’s Ottawa Citizen, just as Southam’s Winnipeg Tribune, for its part, was beginning to prove itself a worthy foe of Thomson’s Win-

mpep FVee Press. Then came Black Wednesday.

On Tuesday evening, Journal Executive Editor Jim Rennie had given one of his pep talks to the staff engaged in putting out next morning’s Ottawa Valley regional edition. He had reason to be buoyant. Before Thomson acquired it, the paper had undergone a long strike and had switched to morning publication in the hope of stealing a march on the Citizen. Because of difficulty in attracting advertisers, the financial picture was still bleak (losses of $3.4 million so far for the year.) But the situation in other ways was improving: daily circulation was up about 25 per cent to -126,000 daily and 185,000 on Saturdays. At about 11 p.m., Publisher Arthur Wood (helmsman of FP’S Montreal Star when it collapsed last year, leaving the Southam’s Gazette Canada’s most important minority newspaper) received the fateful message. Following industry custom (with its implicit fear of sabotage), Thomson headquarters had informed the staff that the day just completed would be the last. In all, 375 people would lose their jobs, including some 20-year veterans and one young reporter, Douglas Yonson, who had been hired just the day before. He heard the news at home on his bedside radio.

Long faces at the Journal were still lengthening and plans were being laid for the traditional newsmen’s wake when, at 9:12 a.m. local time, the boom fell in similar fashion on the weaker of Winnipeg’s two papers, the morning Tribune. The story was much the same. Southam had lost an estimated $3 million in the face of recalcitrant advertis-

ers, though the paper’s new look and editorial vigor had increased the circulation in five years by 35 per cent (to 100,000 copies per day). The scene in the newsroom was bleak, but the paper’s final edition concealed the bitterness. At the Journal, the last day’s frontbanner headline read OTTAWA JOURNAL CLOSED after editors spiked a suggestion for THOMSON SINKS ANOTHER PAPER. By contrast, the Tribune went out with a good cheer: IT’S BEEN 90 GREAT YEARS! That done, many of the 400 suddenly jobless workers began cleaning out their desks and lockers, preparing for their own newspaper wake at the Winnipeg Press Club in the Marlborough Inn. At about the same time, the status quo in Vancouver was being assaulted, though in a way less dramatic and with results that resist clearcut interpretation.

The official version of the events from the two publishing concerns is that the closures at the Journal and the Tribune were unrelated to one another and to events in Vancouver, where money had changed hands. This part of the drama had its origins in 1965, when FP’S afternoon Sun and Southam’s morning Province decided to pool their plant and equipment while maintaining their editorial aloofness from one another. The result was a holding company, Pacific Press Ltd., owned jointly by the two companies, which would split profits in good years and losses in bad. The trouble, as it became increasingly

clear, was that the smaller, weaker Province was forever watering down with its deficits what would otherwise have been the Sun's gains. What is more, the two could seldom agree on how to head off labor unrest. To keen observers, the relationship was becoming shaky as the Sun grew weary and the Province surprisingly cocky. (Earlier in the month, for instance, Southam lured away FP’s commentator Allan Fotheringham, whose column is thought to add untold thousands in circulation to whichever paper prints it.) Such was the genesis of Black Wednesday.

In a deal kept secret until the deed was done, but hinted at in a dozen tiny ways, Southam Inc. paid Thomson $57.4 million for its 50-per-cent interest in Pacific Press—that is, for The Vancouver Sun (see page 41). In the bargain, Southam also got back a minority interest in its own Montreal Gazette, which had come to Thomson as a sweetener in an earlier negotiation. Southam, for its part, gave Thomson the presses and physical plant of The Winnipeg Tribune-ex tra capacity the Winnipeg Free Press may well need to take advantage of its new stranglehold on that market. But this still left the question of what would happen to the face of Vancouver journalism. Here, too, there are two camps.

St. Clair Balfour, chairman of Southam, holds out unspecific promises. “Vancouver is significantly larger than either Winnipeg or Ottawa,” he says. “We see an additional newspaper there.” He added that “Vancouver suffered largely because of disastrous strikes” by the craft unions rather than because of general economic conditions. He and other Southam officials even hint at the possibility, at some future time, of a third Vancouver paper, probably a tabloid. “In any event,” says Balfour, “I would think it will be three months” before bugs are ironed out and any plans made final. To newspapermen, however, none of this is as yet clear, and they are suspicious that the existing papers may in time become one. “It reminds me of the jollyingalong the people got at the Journal or the Tribune—right before the axe fell,” says one. But then the news professionals are understandably bitter—not just at the irreparable loss of two more Canadian dailies, but at what they consider callous tactics even by the standards of an industry not known for its generous employee-management relations.

One of the sticky questions is that of severance pay, a subject that still rankles because of the 1971 closure of The Toronto Telegram, some of whose workers ended up going to court for back benefits. As the events of last week

unfolded, Southam announced that all Tribune staff would be paid full salary through the end of the year plus an extra week’s pay for each six months on the job. Thomson, however, offered Journal employees a cheque for three months’ work in addition to a week’s pay for every six months of service up to a maximum of 52 weeks. And one part of the Thomson organization affected by Black Wednesday—the high-toned FP News Service—had to bargain for severance parity with the Journal.

For months, the fate of the news service had hung in the balance, with persistent stonewalling from Thomson officials as one employee after another left for more stable fields. With The Globe and Mail refusing to use the service, the Albertan sold, The Montreal Star mouldering in its grave, the Ottawa Journal and The Vancouver Sun gone, only two possible customers remained: the Winnipeg Free Press and the lowly Lethbridge Herald, the last

vestiges of the original pre-Thomson FP web. Clearly, Thomson executives wanted the service to go away and die quietly. On Wednesday, Service Editor Doug Small insisted on a formal decision and was told no severance pay would be authorized for the dozen remaining employees. Small argued and finally received the promise of benefits—but only if he, not the Thomson executives, announced the disbanding, thus sparing them a bit more of the inevitable public relations fallout for decisions it felt it had to take for sound business reasons.

By getting it all over with in a single day when Parliament was conveniently not in session, the two former competitors hoped to minimize the heat and the possibility of lingering criticism. Yet the plan (already delayed a week so as not to draw fire during the Winnipeg premiers’ meeting) was hardly carried

out with paramilitary precision.

Wednesday morning, Balfour phoned the office of Prime Minister Pierre Trudeau to give him advance warning of the deal. The PM was out (Press Secretary Jim Coutts took the call), but had known the details already from reading the Journal, the paper’s last scoop, and one at the expense of the people who were pulling its plug. When the paper hit the streets, the deal had not yet been made final. In fact, Thomson Newspapers President John Tory was in a meeting with Toronto lawyers ironing out fine points as late in the game as 8 a.m. Wednesday. Informed sources claim senior Thomson officials were angered by the leak caused by their taking cognizance of The Globe and Mail's deadlines while ignoring those of the Journal and which necessitated a hasty recasting of the dreaded press release.

By noon, the Toronto Stock Exchange had ordered a one-day suspension of trading in Thomson and Southam

shares. But before the ban could be implemented, Thomson A shares climbed by 62 cents to a 1980 high of $19, leaving the damaging, however erroneous, impression of inside shenanigans. In fairness, though, the bulls were reacting mostly to other news. With some of the worst timing in the annals of corporate flakery, Thomson Newspapers had earlier that day released its consolidated profit figures for the first six months of 1980. The sum was $34 million, up almost $5 million from the same period in 1979. All across town, as newsmen frowned or wept in their beer, the PR community did little but wince. 0

With files from Peter Carlyle-Gordge, Thomas Hopkins, Pauline O’Connor and Merilyn Read.