COVER

IN THE BLACK

NEWSPAPERS CAST A LUCRATIVE SPELL

D'ARCY JENISH July 17 1989
COVER

IN THE BLACK

NEWSPAPERS CAST A LUCRATIVE SPELL

D'ARCY JENISH July 17 1989

IN THE BLACK

NEWSPAPERS CAST A LUCRATIVE SPELL

Seated in a high-backed chair in his fourth-floor office, Douglas Creighton nibbled on a bacon and cheese sandwich and explained how the Toronto Sun Publishing Corp. had spent $100 million since November, 1987, starting two newspapers and buying 27 others. As a result of the spending spree, the company whose papers became famous for scantily clad page 3 Sunshine girls, racy headlines and exhaustive sports coverage now owns properties as diverse as the monthly Ontario Hog Farmer and a three-per-cent interest in Toronto’s Sky Dome. But although Sun Publishing—62-per-cent owned by Maclean Hunter Ltd., which also publishes Maclean’s—has gone through a remarkable change, Conrad Black’s Toronto-based Hollinger Inc. has exceeded even that. Last year, the company bought 21 dailies and 59 weeklies to increase its worldwide total of publications at the end of 1988 to 156. In Quebec, among the 20 acquisitions by Pierre Péladeau’s Québécor Inc., were seven weekly newspapers and nine printing companies. Québécor also launched the Montreal Daily News during 1988 in partnership with British press baron Robert Maxwell.

Disturbing: Most major Canadian newspaper companies have benefited from a strong economy over the past several years. As a result, they enjoyed the highest advertising revenues among all media last year and increased profit margins in some cases exceeding 20 per cent of investment. But, despite their currently healthy balance sheets, some senior newspaper executives say that they see disturbing trends emerging that could threaten the industry’s future. For one thing, newspaper circulation has not kept pace with the growth in the number of Canadian households over the past decade. Some industry observers contend that a new generation of Canadians, raised on television and computers, has less interest in newspapers.

Despite the growth of other competing media, newspapers have remained the single largest advertising medium in both Canada and the United States. Last year, Canadian advertisers spent $2.8 billion in newspapers, compared with $1.8 billion in catalogues and direct-mail promotions. Television ranked third with revenues of $1.2 billion. What troubles some newspaper executives is the declining number of Canadian households that subscribe to a daily

paper. In 1979, close to 72 per cent of all households received a newspaper daily. By the end of 1988, the industry’s household penetration rate had dipped to 62 per cent.

For Toronto-based Southam Inc., Canada’s largest-circulation newspaper chain, market research is becoming an increasingly important tool for holding subscribers and for ensuring that advertisers are reaching readers. Southam, whose daily papers include The Gazette in Montreal, The Ottawa Citizen, Edmonton Journal and The Vancouver Sun, bought 60 per cent of Winnipeg-based polling firm Angus Reid and Associates for an undisclosed amount last March. Southam president John Fisher said that Reid will conduct regular surveys of Southam readers. The information will be used to help shape the editorial product

and help advertisers reach their audiences.

For his part, David Jolley, publisher of The Toronto Star, Canada’s largest daily paper, said that its owner, Torstar Corp., has decided to reinvest after five consecutive years of rising profits. Torstar will spend $310 million, the largest single investment ever made by the company, on a new printing plant.

Meanwhile, The Globe and Mail, which is part of the Thomson Corp. media empire, remains committed to billing itself as Canada’s national newspaper, said publisher Roy Megarry. The Globe currently sells 330,000 copies a day, including 100,000 outside Ontario, but Megarry said that he hopes to have circulation of 150,000 outside Ontario within five years. Megarry said that the Globe will be moving more reporters from Toronto to other domestic bureaus to minimize the “Toronto-Central Canada perspective reflected in the paper.”

Emerging: For emerging media giant Black, an impor tant part of the future appar ently lies in small American communities like Boonville, Mo., where he owns The Dai iy Reporter, and Newport, Ark., where he owns The Bargain Hunter's Guide, a free-circulation weekly. But, in recent years, Black has also been building his global press empire. He bought the London Daily Telegraph in 1985 for $51 million from the Berry family. After moving the newspaper to the rede veloped Docklands area of London and instathng a state of-the-art computerized

press room, what had been a

steady drop in circulation held steady at 1.1 million copies a day. In April, 1989, Black acquired 77 per cent of the influential Jerusalem Post by outbidding a group that included Maxwell and Canadian Charles Bronfman.

Since the start of the year, Hollinger has bought four per cent of Britain’s United Newspapers PLC, which publishes The Daily Express, a London tabloid with a circulation of 1.7 million. In Canada, Hollinger owns the monthly magazine Saturday Night and the ninepaper Sterling Newspapers Ltd. chain, including the Review Extra in Richmond, B.C., and This Week, of Sault Ste. Marie, Ont. With „ another big takeover, Black g would be well on his way to E becoming an international £ media giant.

D'ARCY JENISH