Chronicle Herald buys all Transcontinental newspapers in Atlantic Canada

CTV Atlantic: Herald buys Transcontinental Canada's oldest independent newspaper has purchased more than two dozen newspapers in Atlantic Canada. CTV's Allan April reports.

HALIFAX -- Canada's oldest independent newspaper -- whose newsroom has been on strike for over a year -- has bought all of Transcontinental Media's newspapers in Atlantic Canada.

The Halifax Chronicle Herald said Thursday that a new company, SaltWire Network, will comprise 27 Transcontinental newspapers and the novanewsnow.com website and the Herald's own publications.

Mark Lever, president and CEO of SaltWire Network, wouldn't divulge the financial terms of the transaction, but said being in 30 communities would give the entity a "renewed relevance."

"The success here is going to be about connecting with our audiences and engaging them, and like every media organization we've got to find a way to monetize that successfully going forward," Lever said in a telephone interview.

He said while talks had been ongoing with Transcontinental (TSX:TCL.A), the deal in the end came together quickly.

"Really it was us ultimately approaching them with a 'Why not consider us?' idea," he said.

Katherine Chartrand, director of communications for Transcontinental, confirmed that SaltWire had approached the company several months ago about purchasing the newspapers.

She said the papers are profitable and represent $66 million in annual revenues.

Among the newspapers involved in the transaction are the Charlottetown Guardian, St. John's Telegram and the Cape Breton Post.

Transcontinental remains the owner of two plants operated within its printing division in the region.

It says about 650 of its media employees in Atlantic Canada are part of the transaction and will receive an offer from SaltWire Network Inc.

Lever said the immediate plan is to keep the papers whole, including their workforces.

"The goal of this is to give autonomy and some authority in those local brands so that they can have the resources to cover the communities that they serve better going forward," said Lever. "This is not reducing staff complements."

He said content would be shared between individual papers as required.

The acquisition comes amidst a contentious strike involving editorial staff at the Herald.

The union for the 54 striking reporters, photographers, editors and support staff at the Halifax Herald was scathing in its assessment of the purchase. It said the announcement stood in "stark contrast" to the concessions the Herald has insisted upon over the past 16 months.

"We were taken aback by it," said Ingrid Bulmer, president of the Halifax Typographical Union, a local of CWA Canada.

"We thought maybe at some point somebody else would buy the Herald. We never in our wildest dreams would have thought that a company crying poor would come out with an announcement that they've gobbled up a good portion of the Atlantic provinces newspapers and weeklies -- it boggles the mind."

Martin O'Hanlon, president of CWA Canada, noted the company has repeatedly said during bargaining that the operation was not sustainable with the newsroom's costs.

"They demanded massive concessions, and we actually gave them concessions on wages, on pension... and it could have saved them millions of dollars, and now we find out they have millions or tens of millions of dollars to buy other properties," said O'Hanlon in a phone interview Thursday.

The acquisition brings two of Atlantic Canada's most prominent media properties under single ownership.

O'Hanlon said that means SaltWire Network Inc. and the Irving-owned Brunswick News Inc. control most of the newspapers in Atlantic Canada.

"We saw this with Postmedia, which controls most of the daily newspapers from Vancouver to Montreal -- which never should have been allowed because it's just crazy. And now you're going to have the same thing in Atlantic Canada," said O'Hanlon.

Douglas Barrett, a media management professor at the Schulich School of Business at Toronto's York University, said he believes the acquisition is "a good fit," and said the newspapers are likely successful businesses that would be worth buying.

Barrett said the current struggles of print journalism do not always extend to smaller outfits, like many of the papers acquired by the Herald.

"The big story is that newspapers are crashing. The less told underlying story is that small market papers are doing fairly well," said Barrett, who attended Dalhousie University in Halifax.

"They're hyper-local and they have pretty solid market penetration. Lots of them go to most of the households in the communities they serve. People who live in small towns are really interested in what's goes on in those communities and there's nobody else to cover the municipal elections and who won the local peewee hockey game and so on."

He said the smaller papers also don't usually have much -- if any -- competition, and consequently, if residents want to advertise, that paper is the only vehicle.

Lever said while the competition bureau would likely look at the acquisition, he believes the deal is solid.

"There is no overlap in major markets or smaller markets for that matter so we are comfortable that we meet the standard," he said.

Lever said the new organization would have 12 collective agreements, and pointed out that Transcontinental had already made some "tough decisions" ahead of the sale.

"We feel very comfortable that much of the stuff we are trying to accomplish in our contract in Halifax has already happened at the other papers inside this organization and we feel very comfortable that we'll enjoy good relations with those bargaining units."

The deal also includes the acquisition of four printing plants operated within TC Media, commercial printing operations in the province of Newfoundland and Labrador, and combines the largest distribution networks in Atlantic Canada.

The sale leaves Transcontinental with 99 local and weekly newspapers in Quebec and one in Cornwall, Ont.

Chartrand said the remaining newspapers aren't for sale but Transcontinental would evaluate any purchase offers, as it does with all assets.

"It's a sector that has little opportunity for growth but which is still profitable and our strategy is to continue to optimize these assets," she said.

Transcontinental CEO Francois Olivier last December said its media operations, which have been squeezed by lower advertising revenues, were no longer core to the future of the commercial printer and packaging firm.

In May, 2016, it sold all assets in Saskatchewan, including 13 newspapers, and laid off 65 employees.