Postmedia a potential takeover target: RBC

Source: bnn.ca

While Postmedia’s daily newspaper business continues to face strong headwinds from free dailies and growing online migration, its assets and mix of shareholders make it a potential takeover target, according to a report by RBC Capital Markets.

“Although the timing and/or likelihood of a potential transaction are highly uncertain, we believe investors could realize a takeout premium,” analyst Drew McReynolds said in a note to clients. “Potential strategic buyers could include Torstar, Woodbridge, Gesca and Transcontinental given the opportunities for cost synergies (i.e., corporate, procurement, distribution, content sharing, production etc.), particularly in adjacent and/or overlapping geographies.”

Postmedia is the former newspaper division of Canwest, and includes titles such as the National Post and theMontreal Gazette. Postmedia’s secured creditors took control of the company after Canwest filed for bankruptcy in 2010.

Torstar has previously shown interest in Postmedia—submitting a bid in April 2010 when Canwest LP put itself up for sale. The bid was backed by Fairfax Financial Holdings, which holds an investment in Torstar.

“Although we do not believe a major acquisition is a current priority for Torstar, we view Torstar as a logical buyer for Postmedia Network should priorities change and/or the right opportunity arise,” McReynolds said. “We note that with the completed sale of CTVglobemedia, Torstar is in a much stronger financial position than the company was in April 2010.”

One major stumbling block to a bid by Torstar is the valuation gap between the two companies. RBC says Torstar is currently trading at EV/EBITDA multiple of 4.1 versus Postmedia’s 6.6 valuation.

RBC initiated its coverage on Postmedia on Wednesday with an “underperform” rating and a $14 price target.

The Perils of Postmedia: News staff out, managing editor in, at Edmonton Journal

Source: albertadiary.ca – By David J. Climenhaga

This post also appears on rabble.ca.

The Press” … back in the day when the Edmonton Journal was a great newspaper. Below: soon-to-be Journal managing editor Stephanie Coombs, former Journal publisher Linda Hughes, Colonist founder Amor de Cosmos.

Just when it didn’t seem like another drop of blood was left to squeeze from its various Alberta stones, Don Mills, Ont.-based Postmedia Network Inc. pushed another five senior newsroom employees out the door of the Edmonton Journal on Friday.

The carnage at the Journal included two veteran copy editors, two graphic artists and a National Newspaper Award winning photographer.

Reports from Alberta’s deep south indicate a similar number of newsroom staffers were made to walk the plank at the Calgary Herald about a week earlier.

The situation at the Journal is actually worse than it appears at first glance, however, since not included in the casualties listed above are a veteran newsroom administrative support worker, gone from the building the same day after decades on the job, a talented young reporter who recently quit in disgust at the lack of support for journalistic effort, the newsroom’s Web and social media guru, who also quit, and a significant number of distribution employees.

Several other respected Journal reporters, editors and executives had already departed either during a round of layoffs and packages last fall or soon thereafter. Together, insiders claim these departures leave the paper with only about a dozen city-side reporters to cover the news in a city of close to a million people.

Possibly related to this, an announcement is expected tomorrow of a newsroom managerial reshuffling that is said to include the addition as managing editor of Stephanie Coombs, late of the Ottawa Citizen and more recently city editor of the self-evidently unhyphenated Victoria Times Colonist.

Ms. Coombs’ coruscating trajectory follows the path across the cosmos described by the Journal’s recently appointed editor in chief Lucinda Chodan, who is also a veteran of the once-great Victoria newspaper founded by Amor de Cosmos in 1858. That paper was known in those pre-media non-network days as the Daily British Colonist. For his sins, Mr. de Cosmos was briefly premier of British Columbia.

Probably more important to the decision-makers at Postmedia, however, was Ms. Chodan’s history at the Edmonton Sun, which some time ago went down the same dreary path now being trod by the Journal’s weary and diminished editorial staff.

Interestingly, some Journal insiders assert the latest bloodletting will leave the city room with a staff-to-management ratio of about two to one – that is, half a dozen or so senior editors to supervise about a dozen front-line newsroom workers.

At the risk of flogging a dead horse, anyone who has served any time in the newspaper business understands that this kind of staff cutting usually improves the bottom line in the short term at the expense of the quality of the journalistic product over time. The effect of this phenomenon is one of the key reasons for the decline of the Canadian newspaper industry, which the newspaper executives who made these foolish decisions inevitably blame on the Internet.

The desire for short-term gains regardless of cost at the metaphorically named Postmedia may be related to the corporation’s parlous financial state, described last month in the company’s own Financial Post publication as the effect of a combination of non-recurring charges related to cost-cutting and “declines in print advertising.” However, a series of acquisitions and other business decisions made over several years by owners including Southam Inc., Hollinger Inc. and Canwest all contributed to this doleful state of affairs.

Certainly, Postmedia President and CEO Paul Godfrey was quoted as saying in the same FP story that “debt repayment and cost management will continue to be priorities in the ongoing transformation in our business.” And so it would seem!

Postmedia may be extremely anxious to cut costs to make its stock more attractive, since it is “imperative” for the company to sell shares “if it wishes to remain a Canadian newspaper publisher under tax laws,” the FP story explained. “Under the law, advertisers are permitted to write down ad expenses spent on advertising with Canadian newspapers.”

Alas for Postmedia, its current owners are made up “primarily of U.S. hedge funds and banks that are former creditors of Canwest Global Communications Corp. The group bought the assets after the media conglomerate filed for creditor protection and was forced to sell.”

This all has remaining Journal employees on their knees nightly praying to whatever deity they worship that someone will buy the Journal and somehow return it to its salad days, when it had the reputation as the best newspaper between Vancouver and Toronto – or at least between Kamloops and Medicine Hat.

Lending credence to their fevered hopes is the fact that Linda Hughes, the Journal’s respected former editor and publisher who retired in 2006, was last year appointed to the board of Torstar Corp., publishers of the Toronto Star. As readers of this blog know well, the Star is the last great newspaper still publishing in Canada.

At least once before in recent years, Torstar looked at the Journal as a potential addition to its stable of newspapers.

Will Ms. Hughes and the Torstar Boys ride to the rescue of the beleaguered Journal? Tune in next time for another exciting episode of the Perils of Postmedia!

New owners of Canwest papers targeting business offices after slashing editorial, advertising jobs

Source: cwa-scacanada.ca

Postmedia Network, having just slashed scores of jobs in editorial and advertising departments across the former Canwest chain, is now turning its sights on the newspapers’ business offices.

The new company’s owners plan to begin centralizing the finance departments’ functions in Toronto and Winnipeg by the end of January. Staff reductions will be accomplished through buyouts and layoffs.

While Postmedia says it does not envision departmental closures, it is unknown how many business office jobs will be lost across the chain, which includes the flagship National Post, Calgary Herald, Edmonton Journal, Ottawa Citizen, Montreal Gazette, Vancouver Sun and Province, and the Victoria Times-Colonist.

Cuts in a newspaper’s business office will undoubtedly reduce local service and mean fewer connections between the paper and the people it serves in the community.

 “While any staff cuts are lamentable, we are particularly concerned about the editorial jobs that have been eliminated,” says Arnold Amber, Director of CWA Canada, which has members at five of the former Canwest papers. “Cutting reporters, photographers and editors certainly does not improve the quality of a newspaper.”

Although Postmedia is justifying the cuts by saying it wants to focus on a move to digital media, getting rid of experienced journalists is a recipe for mediocrity, says Amber.

“Loyal readers of these newspapers, advertisers and business customers expect high-quality local service and news coverage. If all of that is diminished, it does not bode well for the future of that community’s newspaper,” he notes.

The cuts have been swift and deep since Postmedia’s new fiscal year began on Sept. 1. CEO Paul Godfrey, while acknowledging that nearly all of the 11 Canwest dailies are profitable, is looking to recover $40 million to help pay down debt incurred when Postmedia bought the chain from Canwest.

CWA Canada has determined that Postmedia has shed at least 228 employees, including managers, across the chain. While it is difficult to obtain precise figures, the union estimates there have been about 100 cuts in advertising and at least 70 in editorial. Overall, CWA Canada has lost about 50 members as a result of the cuts.

Last year, Canwest chopped almost 800 jobs or 13 per cent of its workforce, while struggling under creditor protection, leaving Postmedia to inherit about 5,000 employees.

The most recent cuts were achieved by either buyouts or layoffs, with the former dominating at unionized newspapers and the latter at non-union papers.

One source told CWA Canada that all the cuts at the non-unionized Calgary Herald were layoffs. “Nobody was offered a buyout in the Herald newsroom; they were just laid off. Management announced that 35 jobs would be chopped, including eight in the newsroom.” The source adds: “The deskers (copy editors) feel like the sword of Damocles is hanging over them because management classifies them as ‘non-content providers’ and considers them expendable.”

This suggests that Postmedia is prepared to have its reporters and correspondents publish directly to the Web, without an experienced copy editor in between, ensuring an article’s accuracy, balance and, in many cases, legally acceptable reportage.

The Cuts
Calgary Herald

Jobs cut: 35 layoffs / 8 editorial positionsEdmonton Journal

Jobs cut: 20 (2 layoffs) / 8 editorial positions

Montreal Gazette

Jobs cut: 27 (23 union) / 10 editorial positions (includes 2 retirements)

Ottawa Citizen

Jobs cut: 42 (17 union) / 10 editorial positions

Regina Leader-Post

Jobs cut: 18 (3 layoffs) / 3 editorial positions

Saskatoon StarPhoenix

Jobs cut: 9 (unconfirmed)Vancouver Sun The Province

Jobs cut: 50 (48 union) / 20 editorial positions

Victoria Times-Colonist

Jobs cut: 12 (9 Guild members and 3 CEP)

2 editorial positions

Windsor Star

Jobs cut: 8 / 7 editorial positions