The Postmedia-Quebecor deal: Welcome to newspaper hell, where the lowest common denominator will prevail

Posted on October 07, 2014, 12:45 am
9 mins

An unreconstituted Toronto Sun front page. Newspaper hell? Turns out it’s not quite as bad as we imagined it would be, except for the few unfortunates who still work in what’s left of the industry. Below: Tom Kent, who headed the 1981 Royal Commission on Newspapers, which was ignored when it was written and is still ignored.

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.

Consider:

  • 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 getting 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 Rabble.ca.

5 Comments to: The Postmedia-Quebecor deal: Welcome to newspaper hell, where the lowest common denominator will prevail

  1. October 7th, 2014

    News papers are a fundamental part of the media which is an important pillar supporting democracy. Media is the forth branch of government. It is our window on the workings of our world. It must be funded to exist. No longer do we dare to fund it as we have by selling audiences to advertisers. Please donate to David Climenhaga and then check this … http://no-ads.ca/about

    Reply
  2. Alex P

    October 7th, 2014

    The hope that the gravy train couldn’t possibly end is universal. CNN Headline News is now reduced to playing last year’s viral YouTube videos while waiting for Nancy Grace come on. Why even have a channel?

    Viacomm, the US telecom giant, is threatening to let Canadians have free run of their online feeds to channels like Comedy Central. That’ll learn ’em ungrateful Cunnucks!

    What’s not happening is any attempt to let the market dictate what smaller fee more consumers will be willing to pay along with a deep look at what a local paper does best. (Hint: it has nothing to do with influencing national policy.)

    I wonder what a chart relating a strong middle class to newspaper revenue would look like? Aww, that’s just crazy talk! Onward neoliberal social support crashers. Feed the .01%, they’re the real fragile snowflakes.

    Reply
  3. jerrymacgp

    October 7th, 2014

    If the online paywalls are so porous, how come I can’t get past them? Is it just because I haven’t devoted any time or effort to do so?

    The real issue with paying for online content, including news, is that when the Internet first developed, everything on it was free, except access to it. It’s as if it were a toll highway, but with free dining establishments and free hotels all along it. Now that there are efforts to “monetize” it, many long-time Netizens viscerally resent having to pay for anything on the ‘Net, just on general principle. So news sites get hacked, and free amateur news sites get put up, often with very extreme views on them.

    I’m not sure there really is a viable business model for professional print journalism any more. It’s very sad, really, but as Peter Trueman used to say on the original Global News (here I’m dating myself), “That’s not news, but that, too, is reality”.

    Reply
  4. Sam Gunsch

    October 8th, 2014

    FWIW…
    Links to:
    Three models that I like, and one that sounds great but has yet to launch, that counter, a bit, the current overall descent neoliberal(market fundamentalist) pseudo-journalism hell.

    Progressives at:
    http://rabble.ca/about/landing
    =============

    A Dutch site that is growing.

    https://gigaom.com/2014/10/02/three-things-traditional-media-could-learn-from-a-crowdfunded-dutch-news-site/
    =============

    A Canadian digital news site of high quality. Relying on donor and subscriber funding and grants and is expanding.

    http://thetyee.ca/News/

    ============
    U.K. innovator’s proposal:
    Dan Hind’s public commissioning model of media discussed here.
    Give citizens some editorial commissioning control.

    excerpt: “In ‘The Return of the Public’ you make the case for the ‘public commissioning’ of journalism, in which members of the public directly allocate money to journalists. Could this model work in publishing too? ”
    http://www.newleftproject.org/index.php/site/article_comments/how_power_shapes_publicity_the_political_economy_of_publishing_part_2

    Reply
  5. Alex P

    October 8th, 2014

    Philosophical question: When early man walked the earth, listening to disco and not recycling, say 1980, was the purchase of a daily newspaper seen as an exchange of money for the bundled paper medium or a strangely convoluted way to tip the journalists?

    I ask because the basic disconnect may have more to do with a willingness to pay for physical objects. I would also add that not many physical items give a vendor the ability to remove content from your shelves, forbid lending or reselling or gifting the items, and spy on you in ways you can’t imagine.

    In this environment, am just a grouch for saying, figure out a new way to make money?

    Reply

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