SPECIAL REPORT

AN OUTBREAK OF NEWSPAPER WARS

RAE CORELLI February 8 1988
SPECIAL REPORT

AN OUTBREAK OF NEWSPAPER WARS

RAE CORELLI February 8 1988

AN OUTBREAK OF NEWSPAPER WARS

SPECIAL REPORT

At 8:06 p.m. on Sept. 9, 1954, Marilyn Bell touched the breakwater off Toronto’s west-end shoreline and became the first swimmer to complete the 32-mile crossing of Lake Ontario. Awaiting the exhausted, disoriented 16-year-old girl was a cheering crowd of thousands, and two ambulances—one hired by The Toronto Star, sponsor of the swim, and the other by the rival Telegram which hoped to snatch her amid the confusion. But Star reporters disabled the unattended Telegram ambulance, bundled Marilyn into their vehicle and drove her downtown to the Royal York Hotel. There, after some corridor fistfights among rival newsmen, she was finally secluded in a Star suite for rest, a medical examination—and her exclusive story. That kind of street-brawling sensationalism among independent dailies belongs to journalistic history. But the urge to fight has survived, and head-to-head newspaper competition is undergoing a revival in key markets across Canada.

Still, in the 33 years that followed the struggle for Bell’s story, the headlines shrank, the stunts were abandoned, and newspaper rivalry dwindled. The aggressive pursuit of advertising revenue by the television, radio and magazine industries in the 1960s and 1970s made it increasingly uneconomical for dailies to fight each other for a diminishing slice of the media pie—and encouraged mergers and chain ownership. Now, only 20 of the nation’s 110 Englishand French-language dailies—four in Montreal, three each in Toronto and Halifax, and two each in Quebec City, Ottawa, Winnipeg, Calgary and Edmonton—are in competitive markets; the other 90 enjoy highly profitable monopolies. It is against that background that the fights for readers, advertisers and revenue are brewing—and for some of the contenders the stakes are enormous.

Conflicts: Although the principal conflicts are in Eastern and Atlantic Canada, almost any degree of success by the challengers of established newspapers could well encourage renewed competion in other centres, particularly in the monopoly markets of Vancouver and Victoria.

But for now, these are the principal battlegrounds:

• In Halifax-Dartmouth, the tabloid Daily News has taken on the morning Chronicle-Herald, which, with its afternoon sister-paper, The Mail-Star, has dominated that market for nearly 40 years. The Daily News, launched in 1979, claims that its daily paid circulation has reached 22,825 copies compared to The Mail-Star’s 58,881 daily total.

• In Montreal, publisher Pierre Péladeau said that he will invest $25 million during the next five years in his tabloid The Montreal Daily News, which is scheduled to be launched early in March, His chief competitor: The Gazette. With a

daily paid circulation of 211,479, that morning daily has monopolized Montreal’s English-language market since The Montreal Star folded in 1979.

• In Toronto, the country’s biggest newspaper battle is shaping up between the 52year-old Globe and Mail and the 81-year-old business news weekly, The Financial Post.

The Post is poised to enter the national daily field this week.

Currently, the Post reports a weekly paid circulation of 200,000 copies. While taking aim at the rival Globe’s daily sales of 318,300 copies, the Post will provide limited coverage of entertainment and sports and a general news digest. Instead, its primary challenge is to the Globe’s prestigious Report on

Business section. According to Globe publisher Roy Megarry—who refused to disclose the newspaper’s earnings— the ROB accounts for more than half of the Globe’s yearly revenues.

At the time of Bell’s Lake Ontario swim, competing dailies were usually family-owned. Now, however, multimedia chains are involved in the struggle for market dominance. In Halifax, The Chronicle-Herald and Mail-Star, owned by the Dennis family, are up against the growing media hold-

ings of entrepreneur Harry Steele’s Newfoundland Capital Corp., which bought The Daily News from founder and publisher David Bentley in 1985. And in an attempt to reform the paper’s reputation for racy writing and often unreliable reporting, Steele hired assistant managing editor Douglas MacKay away from The Winnipeg Free Press and appointed him editor last year. Said Stephen Kimber, an assistant professor of journalism at Halifax’s King’s College: “Initially, The Chronicle-Herald tried to ignore The Daily News but then they were forced to begin following up on issues they could have ignored before.”

Revenues: Meanwhile, Péladeau’s entry into the English-language market in Montreal has pitted Québécor Inc. against Toronto-based Southam Inc., the owner of The Gazette. Québécor, which owns three newspapers in Quebec, has projected revenues of $455 million this year. Industry analysts predict that Southam’s 1988 revenues will be nearly $1.5 billion from its holdings of 15 dailies, one financial weekly and printing, books and communication divisions. But Péladeau is not shouldering the risks of his new venture alone: British publisher Robert Maxwell, the owner of London’s mass-circulation Daily Mirror, has what Péladeau describes as a “major minority interest” in The Montreal Daily News. To protect that interest, Mirror designer John Hill helped design the Daily News.

Still, Péladeau acknowledges that he has fared badly in earlier ventures in daily newspapering. Five years ago, he bought The Winnipeg Sun, which has yet to make a profit with a paid daily circulation total of 47,698 copies. But Péladeau predicted that the newspaper will generate a

profit this year. He also lost money when he launched a daily tabloid, the Philadelphia Journal in 1977. That publication folded four years later and cost him $14 million. Despite those poor returns, Péladeau said that in Montreal the enthusiastic response of advertisers had made him optimistic about the chances of The Montreal Daily News surviving. Added Péladeau: “I am not trying to knock off The Gazette. What we are offering is an alternative: a jazzier, faster-reading newspaper.”

Still, late last month, Gazette managers began their counteroffensive. They announced that The Gazette would begin publishing a Sunday edition—on Feb. 28, only days before the first edition of the Daily News is scheduled to roll off the presses. Said publisher Clark Davey, who noted that Gazette officials had been planning such a venture for more than one year: “We are trying to close up any opportunity for a new paper to build a base on the empty Sunday.”

Struggle: Still, the Halifax and Montreal rivalries pale in comparision to the nationwide struggle that looms between The Globe and Mail and The Financial Post. Behind the two contestants are powerful owners. Toronto-based Thomson Newspapers Ltd., with projected revenues of $1.4 billion this year, owns the Globe, and behind the Post is The Toronto Sun Publishing Corp., with 1988 revenue estimated at $377 million. Sun Publishing in turn is 60.5-percent owned by Maclean Hunter Ltd. (which also owns Maclean's). That corporation’s 1988 revenues could reach $1.3 billion—although company officials refused to confirm that figure.

The two men at the centre of the business publication

wars are the Globe’s Megarry, son of a Northern Ireland laborer, and Post president and publisher Neville J. Nankivell. He is the Australian-born son of a cab owner, and came to Canada as a deckhand on a freighter 32 years ago. Megarry, 51, quit school at 15 to help support his workingclass family. He migrated to Canada from Belfast at 19

and went to work as a clerk for the high-tech firm Honeywell Controls in Toronto. Night classes at the University of Toronto earned him certification as a management accountant, and, at 26, he became controller of Honeywell. Megarry later spent five years as vice-president for corporate development at The Toronto Star and became publisher of The Globe and Mail in 1978.

Challenge: Now, facing one of the greatest challenges in his tenure as Globe publisher,

Megarry said that the Post’s entry into daily journalism had not surprised him. Declared Megarry: “They have been talking about it for the last five or six years. But it’s not so much this challenge as the fact that if The Financial Post fails in this effort, somebody else is going to come along a year or two later to try the same thing because our success has become increasingly obvious, and that is going to attract competition.”

Megarry noted that the Globe had hired more staff and

steadily added pages to the ROB during the past six years in anticipation of competition. Declared Megarry: “That has changed the nature of our paper. But make no mistake about it: we are committed to the belief that businessmen need more than just news about business.”

Megarry said that the fact that Nankivell had singled out the ROB for direct attack did not surprise him. “He would be a bloody fool if he didn’t,” said Megarry. “But we have the lion’s share of the market, and you had better believe that we plan to keep it. The Post better have a big, big bankbook because for them it is going to

be a long uphill battle.” Nankivell agreed only that it would be a battle. “What we are talking about here is a newspaper war in the quality market,” he said. A native of Perth, in western Australia, the 53-year-old Post publisher had a grandfather who left farming in Manitoba and “went to Australia looking for gold; what he found was my grandmother.” His other grandmother helped pay for his education with her winnings at the racetrack, where, Nankivell said, “she made a lot of money.” In 1956, Nankivell signed on as a deckhand on a Norwegian freighter, signed off in Vancouver and went to work in the Alberta oilfields. He applied later that year for a job with The Financial Post, which told him to reapply when he had more experience. Nankivell then became a reporter for The Canadian

Press and persuaded the Post to hire him in 1960—two years

before the Globe launched the Report on Business.

After working his way up to

the position of editor-in-chief, Nankivell became publisher in October, 1986. And one year later The Toronto Sun Publishing Corp. announced that it had purchased the Post from its majority shareholder, Maclean Hunter, and would start a daily edition in 1988. That marriage, link-

ing the conservative, business-oriented Post and the brash and saucy Toronto Sun, whose photos of scantily clad “SUNshine Girls” had become the tabloid’s hallmark, has prompted Post editor John F. Godfrey, former president of King’s College in Halifax, to say that “our T and A will be Titles and Acquisitions.”

Class: To Nankivell, the association is ideal: “We’ve got the tradition, the class and the authority, and the Sun has the entrepreneurial drive that will add a lot of

vigor.” And he foresees “one heck of a fight” with the Globe. Said Nankivell: “We’re not going in there to knock out a general daily newspaper. People are still going to want the Globe for its general news, sports, fashion, entertainment and so on. We are going in there to take away readers of the Report on Business and some of the advertising and market, too. We want the ROB reader to read us first. But to say that somebody is going to knock somebody else right out of the ring is something else.”

Demand: According to Nankivell, Toronto’s explosive development

as a financial centre during the past 10 years and the growing demand for business and economic news influenced the Post’s decision to launch a daily edition. Said Nankivell: “People are better educated. You know that when secretaries go out and buy gold, something is happening.”

Initially, the Post will deliver the daily to subscribers’ homes in Metropolitan Toronto before 6 a.m., Tuesday to Friday. The staff will also have the weekly edition ready

for Toronto home delivery before 6 a.m. on Saturday. The newspaper will also be on newsstands on the day it is printed in Montreal, Edmonton, Vancouver and 15 other cities—and in the future Post executives plan to use satellite printing to produce copies for home delivery in those cities. Said Nankivell: “We have always preached competition in our editorials and now we’re practising it.” He maintains that since the Post announced its intentions last fall to go daily, coverage had improved in

both the Globe’s ROB and the other national weekly business newspaper, The Financial Times of Canada, which recently underwent a complete redesign.

Bankroll: The Financial Times, with a paid circulation of 108,000 copies, is owned by Southam — but the chain’s bankroll has not persuaded it to join the competition for daily readers. Said John Macfarlane, the Times’s deputy publisher and editor-in-chief: “The Financial Post in going daily is going to have to divert some of its energy and attention away from the weekly paper. To the extent that that happens, it

presents us with an opportunity to put a lock on the weekly market. So we say, ‘Fine; fight it out.’ ” The Times, he added, has begun the greatest promotion in its history, including a television advertising campaign, and hopes to push its circulation to 200,000 in three to five years.

As to who would likely emerge victorious in the daily business field, Macfarlane said, “There is no doubt in my mind that the Globe will win because they can afford to

spend whatever they need to spend.” The Post, while needing “a hell of a lot of money” to compete, had been “strategically sloppy” in challenging the Globe in the Toronto market where that newspaper was strong.

Besides, added Macfarlane: “Why would anybody switch to the Post when, with the Globe, they also get a pretty good newspaper?”

Partners: To J. Douglas Creighton, president of The Toronto Sun Publishing Corp. and chairman of The Financial Post Co. Ltd. the challenge to the Globe

was not a mistake but a move that promised to be “a lot of fun and make us a lot of money.

Of Macfarlane’s prediction that the Globe would win, Creighton said that

with the highly profitable Financial Times of London and Toronto financier Conrad Black as the Post’s additional partners, “I don’t see running out of money as a problem for either us or the Globe.” Added Creighton: “Nor for

Macfarlane, either, because Southam isn’t exactly bereft.”

Players: But of all the players in this publishing drama, none is as excited as Nankivell, who last week in his sixth-floor office in Maclean Hunter’s Toronto headquarters, declared: “Excited? Oh, God, yes. I’ve wanted to do this for years.” On the night of Feb. 1, he said that he planned to u^don a tuxedo and join «other Post and Sun executives at the Sun building in downtown Toronto to pop champagne corks and watch

the first edition of the Post daily roll off the presses. That promised to be far less dramatic than attempting to kidnap Marilyn Bell, but both events are expressions of a common

impulse in the newspaper business: the war for readers and revenue.

-RAE CORELLI

SHARON DOYLE DRIEDGER

DAN BURKE

VALERIE MANSOUR