If you want proof the Canadian newspaper business is on its last legs, look no further than yesterday's announcement Postmedia Network Canada Corp. is about to take over Quebecor Media Inc.'s 175 English-language newspapers and a few other assets, including the five wretched Sun dailies, for a paltry $316 million.
Yes, $316 million would be quite enough for most of us working sluggos to enjoy a spectacular retirement, thank you very much, but it nevertheless is a piddling sum in terms of what newspaper "properties" fetched not so long ago.
Indeed, the decline of the industry is writ in the spectacular drop in the value of investments in print illustrated by this fire sale to Postmedia. Say what you will about the inadequacies of the market, it pretty well got this one right.
- Back in 1998, Quebecor bought up the profitable Toronto Sun -- "the little newspaper that grew" -- and the rest of Sun Media for a not insubstantial $983 million and proceeded to squeeze it till the pips squeaked to service the debt for its venture into cable TV.
- In 2000, CanWest Global cooked up a deal with Conrad Black's Hollinger Inc. to buy a similar sounding passel of papers -- 13 big city dailies, 136 smaller dailies and weeklies, and 85 trade publications -- in a spectacular and complicated $3.5-billion deal. Unsurprisingly, CanWest turned out to have debt troubles too.
- By 2010, much the same collection of papers was handed on by CanWest to Postmedia for $1.1 billion.
So, really, $316 million compared with the airy heights of three and a half billion free-floating Canadian Dollars starts to sound a lot like Postmedia paid for the value of Sun Media's real estate and not much else.
If it keeps up like this for a few more years, many of us should be able to buy what's left of a Canadian newspaper chain with a credit card!
Why would Postmedia bother, even at that price? Presumably so they can stop competing for advertising sales and manage the final decline of the industry from a monopoly position in cities while there are still a few businesses that see value in newspaper advertising.
If anyone -- especially Postmedia employees -- imagines this is good news for their futures, though, they should think again. The lowest common denominator -- that is, Quebecor's awful way of doing business -- will prevail because it always promises to fix the bottom line in time for the next quarterly report.
Postmedia has been engaged in a brutal Sun-like round of job cuts of its own as it tries without success to figure out how to make any money, let alone the kind newspapers used to produce, in a digital publishing world.
That process will likely get much worse, much faster, as Sun Media managers are absorbed into what's left of the clueless old Southam-Hollinger-CanWest-Postmedia management and take an axe to editorial operations to find more cash for the next quarter.
Readers who might have stuck around out of nostalgia or habit will be driven away as the product continues to decline in a quality -- accelerating a trend that has been continuing and growing more severe over the past 30 years as proofreaders, copy editors and literate reporters have been shown the door.
Outsiders to the newspaper industry may not realize how influential Sun editorial managers already are in some Postmedia newspapers -- a factor directly related to precipitous declines in quality.
Newspapers are not the only business this has happened to, of course. When Daimler AG bought Chrysler, it was supposed to mean better Chryslers. The result was worse Mercedeses. That marriage ended in divorce, thankfully for everyone. But newspapers in the digital age, it is said here, provide the modern era's most spectacular example.
Readers continue to want the excellent editorial product of old, but refuse to pay a dime when they’re already paying through the nose for Internet services and seeing richer folks get the same thing for free. Paywalls to force them to pay simply don't work -- they are as leaky as the proverbial sieve.
Online advertising generates a tenth the revenue print advertising used to -- and what's left of print advertising has been mortally wounded by the realization you can’t tap on the picture and get more information.
The only sensible reason to hang onto a daily newspaper nowadays is to influence people, which is why Postmedia won't give up the Post and, presumably, why Quebecor won't give up its French-language papers. Pierre Karl Péladeau may no longer be Quebecor's CEO, but you can count on it he still has influence there, and keeping French-language media doubtless furthers his dream of being the father of a new nation.
So the only strategy for survival the post-Sun Postmedia is likely to come up with is slashing and slashing and slashing until the fine old Southam newspapers like the Edmonton Journal and the non-Sun Vancouver Sun resemble the Sun Media tabloids their reporters used to sniff at. Expect Sun Media's loony right ideology to reinforce Postmedia's inclination to the same thing.
Before long, I expect, we can look for columnist Don Braid and right-wing agitator Ezra Levant to be sharing a cubicle at the Calgary Herald. I'm sure they can find something to talk about.
Back in 1981, when newspapers still made a contribution to democracy and Canadians who paid attention accordingly were worried about concentration of media ownership, Tom Kent and his Royal Commission on Newspapers made a number of recommendations that, ironically, might have kept the industry viable when the Internet came along.
These included legislated tax breaks for local content, tight rules for ownership to ensure papers remained in local hands, and mechanisms to guarantee communities had a stake in the operations of their local media.
Newspaper owners, who imagined the gravy train would never end, wanted none of it.
Today, when one company is on the verge of controlling all the print media in English Canada, it's hard to find anyone who cares because what Postmedia has bought is on the verge of irrelevance.
So, welcome to newspaper hell. Turns out it's not actually as bad as we imagined it would be.
This post also appears on David Climenhaga's blog, Alberta Diary.
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