Maclean's article points out the contradictory strategies of Quebecor

Interesting story in Maclean's magazine by Quebec bureau chief Martin Patriquin detailing a "two-faced" approach by Quebecor and its combative president, Pierre Karl Peladeau towards the Canadian Broadcasting Corporation. Using letters (which he publishes) obtained through an Access to Information request, Patriquin points out several glaring contradictions, including that Peladeau and his acolytes (e.g. Sun News's Ezra Levant) attack the very existence of the CBC at the same time as Peladeau is writing personal letters and faxes demanding that the CBC advertise in Quebecor publications.

Doubtless, Péladeau’s anti-CBC campaign is at least partly ideological. What unites the differing editorial stances of his English and French properties, apart from their visceral dislike of the public broadcaster, is a populist, free-market ideology of lower taxes and less regulation. Though it has its own public sector connection: roughly 45 per cent of Quebecor Media Inc., Quebecor’s media group, is owned by Caisse de dépôt et placement du Québec, the province’s pension manager funded in large part by taxpayer dollars.

(As readers of this blog will know, Quebecor is the publisher of the largest group of French language magazines in Quebec, in addition to its holdings in daily and community newspapers, TV and cable.)

Quebecor buys naming and management rights to Quebec City arena

Quebecor Inc., the media powerhouse that is Quebec's largest magazine publisher and operator of the Sun Media chain in English Canada, has bought the naming and management rights -- including profit sharing --  for the proposed arena to be built in Quebec City as a lure for a National Hockey League franchise. According to an online story from Canadian Press,carried by Canadian Business

The media company has also been granted exclusive rights to manage the facility under terms of the deal, announced at a wide-ranging news conference Tuesday.

If the building fails to attract an NHL team, Quebecor will pay $33 million for naming rights for 25 years, another $3.15 million per year for management rights, and it will also hand the city 15 per cent of profits from the building.

Those terms would sweeten considerably if the city landed a team — with the fee for naming rights jumping to $63.5 million.

In return, Quebecor gets to manage an arena built entirely with taxpayers' money; the estimated $400 million cost is, so far, being footed exclusively from provincial and city coffers since Ottawa has not yet jumped aboard.

The irony here is that Peladeau rarely fails to play the private enterprise card in his publishing, wireless and television businesses, bridling at regulatory interference, yet is quite prepared to benefit from a facility built by the taxpayer, whether or not the federal government chips in.

The arena is expected to be built by 2015, but the NHL has so far shown no signs of thinking that moving a team to Quebec City is a high or even remote priority.

Is CBC required to share sensitive and competitive information, Maclean's asks?

Maclean's magazine's Quebec bureau chief Martin Patriquin this week chronicles the siege being laid on the CBC by Michel Drapeau, a fervent and frequent user of Access to Information act and how his campaign may be fuelling a feud between Quebecor and the CBC. The story reports that Drapeau -- a lawyer and retired colonel -- has filed nearly 800 ATI requests with the CBC since the fall of 2007 when, under the federal accountability act, the crown corporation became subject to access to information requests. 

“The CBC has not made the psychological and corporate turn,” [Drapeau] says. “They don’t understand that they are no longer a private-like organization that they can do as they wish without any public oversight. They have a sense of hostility toward anybody exercising their right to have access to records.”

For its part, CBC management maintains that much of the material Drapeau has requested is of commercial value to his client, the Quebecor-owned Sun Media chain, and giving it up would be tantamount to Macdonald’s sharing its secret sauce with Burger King. Yes, the CBC is a taxpayer-funded organization, they say; but it is also a broadcaster whose competitors aren’t similarly compelled to divulge sensitive journalistic, creative and programming information.

Drapeau says his requests are his own initiative and Sun Media had no input into them. But it's clear that the results of his requests are providing a stout stick with which Quebecor can beat their hated rival. 

Quebecor's Sun Media chain has been hammering away at the CBC, a major competitor in the French television market, but the impetus for the campaign (vendetta?) is that Quebecor boss Pierre Karl Péladeau, is steamed about a  2007 Le Devoir interview with Sylvain LaFrance, head of CBC's French service, who said that Péladeau "was acting like a thug" by pulling out of the Canadian Television Fund. Péladeau launched a $700,000 defamation suit against LaFrance, which is in court now.

The trial has taken on elements of the absurd. La­france’s lawyer brought in an expert to distinguish the difference between calling someone a thug and saying that they are acting like a thug. (“It’s not an identity, it’s an analogy,” testified linguist Jean-Claude Corbeil.)

Two examples of how playing well with others seems to be an endangered concept

I've never made any secret of my belief in collaboration in the magazine industry; or in my belief that cooperation makes good sense, financially and in terms of the greatest good for the greatest number. Now, in one day, we have two object lessons in short-sighted thinking in other media to remind us (if a reminder is necessary) of the virtues of togetherness: the announcement that Sun Media Corp. is pulling out of Canadian Press; and the announcement that the Canadian Association of Broadcasters is going to shut down.

The Sun decision, as reported in the Ottawa Citizen, was driven by the penny-pinching ways of its parent Quebecor Media Inc., and was not unexpected. But regardless of whether the decision will save "millions" (as the parent claims) by creating its own news-sharing system, it can only be another blow to quality news delivery. We already have the example of CanWest, which did the same, and CanWest News Services has never lived up to the expectation of its masters in terms of delivering top quality information to readers. Quebecor apparently believes that cooperation is a mug's game.

The CAB decision is the outcome of apparently irreconcilable differences between the broadcasting and cable television portions of their membership. It is the latest fallout from the push by big broadcasters like CTV and CanWest to obtain "fee for carriage", a charge to cable companies to carry their over-the-air television signals. What had been for many years a forum for developing a unified voice and message on behalf of all broadcasters  has now simply fallen apart. Again, short-term thinking in which, having allowed the industry to blow apart, the various parts will now have to find ways to create some new structures within which they can ally to defend their own interests. An unnecessary waste of time and energy that could have been avoided.

Both decisions give a new dimension to the definition of a cynic as someone who knows the price of everything and the value of nothing.

Not to be too self-congratulatory, but the magazine business has been steadily moving in the opposite direction, towards a more collaborative approach. The merger a few years ago of Magazines Canada and the Canadian Magazine Publishers Association into a reconstituted Magazines Canada is but one example, as well as the closer cooperation between various industry groups -- including the Canadian Business Press and Magazines Canada -- in a large, annual conference. And the close collaboration between the two large industry awards programs -- the consumer-oriented National Magazine Awards and the trade pubs' annual Kenneth R. Wilson Awards. It seems that the magazine industry not only accepts the "big tent" approach, but is working actively to nurture and grow it. Which is something worth celebrating on a day when other media industries seem to have forgotten how to play nice together.

Péladeau buys out brother, tightens grip on Quebecor empire

Pierre Karl Péladeau now has full control of the entire Quebecor multimedia empire after buying out his brother Erik, according to a story carried by Canadian Press.

In a press release on Thursday, Péladeau said that in accordance with the will of his late father Pierre Péladeau, he had bought "for a nominal amount" (undisclosed) the interests of his brother in the firm Placements Péladeau (PPI), which controls Quebecor.

He now controls all of the 17.1 million class A and 19,800 B shares of Quebecor held by PPI and its subsidiary Holding Peladeau Inc. (HPI). In addition, he owns 3,200 class A multiple voting shares, 50,000 class B shares and 1.4 million options to purchase class B shares.

If Péladeau excercised all of his options within the next 60 days, said the story, he would control or own 86.2% of all class A multiple voting shares and 3.23% of class B shares.

In addition to being Quebec's largest magazine publisher, Quebecor owns the Sun Media chain of tabloid papers, the TVA television network, Videotron, a cable TV company and other online and media properties.

Another mag customer wants to bail from Quebecor World

The Economist magazine has applied to the courts to be allowed to give Quebecor World formal notice at the end of the month that it wants to terminate its printing contract with the troubled company, a division of Quebecor Inc.

According to a story in the Globe and Mail, the prestigious customer filed a motion in U.S. Bankruptcy Court in the Southern District of New York. Because Quebecor World is in Chapter 11 bankruptcy protection, there is a standstill on changes to any contracts. The company wants that stay lifted to allow notice to be given.

“The Economist is being harmed by the continuance of the automatic stay since the stay is all that prevents The Economist from exercising its undisputable contractual right to terminate the printing agreement by timely serving a written notice to terminate,” says the filing.

The Economist's move follows on the decision last month by Rogers Publishing to move printing of all of its consumer and trade magazines to Transcontinental Media at the end of next year.

Quebecor World's troubles continue; refinancing plan withdrawn

What if you want to sell, but nobody wants to buy? This situation has apparently happened again to Quebecor World, the giant printing arm of Quebecor Inc. which is also Quebec's largest publisher of consumer magazines.

According to a report by The Canadian Press, Quebecor World has withdrawn an ambitious refinancing plan (see earlier post) that it announced only a week ago, in which it had planned to sell about $250 million of shares and about $500 million in restructured or new corporate debt. But it apparently found insufficient demand. (A similar thing happened last August.) The result may be that the company will have to look at other ways to raise money, including selling assets.

The company has enough money until July, when its bank facility reduces by $250 million to $500 million, said Jamie Wetmore, senior financial analyst with DBRS, a leading ratings agency.

"They don't have a lot of head room but they are probably OK in the immediate term."

The ratings agency said the company's liquidity issues could intensify if it fails to refinance all or portions of its credit facilities by the first half of 2008. Its weak financial position could also lead to a reduced ability to execute on contract wins and improve its core business.

Concerns about the ability to refinance debt and weak quarterly results contributed to a large sell off of Quebecor World shares last week and this.

As of Wednesday morning, Quebecor World shares were selling for $2.29. A year ago, they were $17.25.

Quebecor World stock down 41% in a week, facing refinancing challenge

Quebecor World, the printing core of Quebecor Inc., which is Quebec's largest consumer magazine publisher, has had a heckuva week, or a heckuva month to think of it.

• It announced it would sell a total of $778 million worth of additional shares and debt securities to investors and to its controlling shareholder, Quebecor Inc. , in a refinancing of its debt and credit facilities. On Tuesday it said that it would be selling up to $213 million worth of its subordinate voting shares to the public through a syndicate of underwriters. It would also be selling about $400 million of new unsecured notes and $100 million of unsecured convertible debentures.
  
• Rating agencies promptly downgraded the company and put it on a credit watch.
• The company's stock price lost ground all week and Friday at one point lost almost 23% of its value and was down 41% for the week and more than 66% for the month.
• Banks have forced Quebecor World to reduce its credit facility, from a high of $1 billion, worried about its ability to raise cash.
• Quebecer World's high rating profile - DBRS gave a rating of B with negative trend - makes refinancing complicated and expensive.
• The company lost US$315 million in the third quarter as revenue declined to $1.41 billion, mainly the result of writedowns of its European printing operations.
• This on the heels of its November 7 announcement that it is selling its perennially troubled European printing business in a deal valued at US$341 million, retaining a minority ownership in a new company to be called Roto Smeets Quebecor.

Jamie Wetmore, senior financial analyst for DBRS said in an interview with The Canadian Press, that not only are there concerns about the look-ahead for the industry, but about the company's liquidity. "In terms of financing, there still is the question about whether or not they can even get it done in these markets.

"If they can't get the financing done, the liquidity issues remain significant."

(Even more alarming, Jan Hatzius, chief economist at Goldman Sachs wrote in a report that a global credit crunch may force lenders to cut the outlays available by up to US$2 trillion, triggering a "substantial recession" in the U.S, where Quebecor World has a substantial part of its holdings.)

Quebecor withdraws bond issue it planned to use to buy Osprey

One of the ways that Quebecor was going to pay for its purchase of Osprey Media Income Fund was to sell a junk bond issue. But the company has cancelled plans to float a $750 million issue in the face of what's described as "a jittery junk bond market", according to a Reuters story. Quebecor's timing could hardly have been worse, having announced its plans only a day before there was a sharp selloff of so-called "junk" or high-yield bonds as U.S. investors worried about weakness in the U.S. sub-prime mortgage market.

Not only was the Osprey sale to be financed in this way, but so was its plan buy all of the common shares of Nurun it did not already own, and to make a payment to the Carlyle Group.

Osprey Media Income Fund still in play and the price keeps going up

The sale of newspaper and magazine company Osprey Media Income Fund looked like a slam dunk for Quebecor Media, leaving a bruised Torstar group sulking in the corner. Torstar and Quebecor have been squabbling about who did what to whom and about whether or not they had a deal to split up the Osprey properties, which include well-known dailies like the St. Catharines Standard and the Kingston Whig-Standard.

Now, through its subsidiary, Black Press of Vancouver, Torstar has topped Quebecor's bid by $1 a unit or $404.5 million compared to Quebecor's offer of $355.5 million. (Torstar owns 19.4% of Black Press.

A story in the Toronto Star says Quebecor has until July 5 to better that offer. All of which is good news for the unitholders of the Osprey Trust, but only goes so far. When it was first created the Osprey units went for $10. Even the richer Black Press offer only brings this to $8.25.

Quebecor is now crying foul, saying that Osprey had a "standstill agreement" that prevented it from seeking other buyers. Osprey says that's nonsense.

Whatever happens, a whole stable of mid-sized newspapers and magazines (including the former Town Media Group (Hamilton magazine etc.)) will be subsumed inside one or the other of Canada's print media giants.

Carving up Osprey Media turning out messy for Quebecor and Torstar

A cosy deal to carve up the Osprey newspaper and magazine empire seems to have gone badly awry as Torstar Inc. has cried foul about Quebecor Corp.'s purchase of all the assets, including such venerable newspapers as the St. Catharines Standard and the Kingston Whig-Standard and a clutch of magazines.

According to a story in the Globe and Mail, the two conglomerates agreed in late 2005 to divvy up the titles; Quebecor later backed out of the deal, or says it did. But in filings by Quebecor with securities regulators, Torstar is said to be contending that Quebecor didn't terminate the agreement and Torstar continues to have the right to acquire pieces of Osprey. Torstar has refused to comment.

Though Torstar isn't named specifically in the filings, Quebecor confirmed yesterday Torstar is the company referred to as "the Joint Bidder" in the regulatory filings.

The regulatory filings indicate Quebecor chief executive officer Pierre Karl Péladeau and Torstar CEO Rob Prichard sent numerous letters to each other arguing the matter.

"The chief executive officers of the Joint Bidder and [Quebecor] exchanged several letters wherein the Joint Bidder asserted that [Quebecor] had not terminated the 2005 agreement," the documents say.

"In the course of 2006, [Quebecor] considered several new proposals put forward by the Joint Bidder relating to [Osprey], but none of these resulted in any new agreement."

Sources indicate Torstar is arguing that the wording of a letter sent by Quebecor announcing it was pulling out of the agreement suggested the two sides would be working together in the future.

Torstar has interpreted that as an indication the Osprey agreement is still intact.

Osprey Media bought by Quebecor

Quebecor Media has purchased Osprey Media Income Fund for $517 million.

Michael Sifton put together the Osprey Media chain of newspapers and magazines out of the smaller dailies and weekly newspapers and magazines that CanWest Media either didn't want or wanted to sell to pay down debt from buying Conrad Black out of his Hollinger empire. In all, Sifton's company bought 54 newspapers, including the St. Catharines Standard, Peterborough Examiner and the Kingston Whig-Standard. Along with them, he acquired some local magazines, one national title (Vines magazine) and later added the Town Media group out of Hamilton (flagship: Hamilton magazine).

He very profitably converted this tidy empire into an income trust and, for a time, was very successful, according to a story in the Globe and Mail.

Backed by venture capital supplied by the Ontario Teachers Pension Plan and Bank of Nova Scotia, the strategy was to build an empire of small Canadian papers that would churn out consistent payouts to investors. But fierce competition in Ontario from Toronto-based Torstar Corp. has sent the units tumbling nearly 45 per cent to $5.55 since their debut.

The sale brings to an end more than a century of newspaper publishing for the Sifton family. Mr. Sifton is great-grandson of Sir Clifford Sifton, a federal cabinet minister who bought the Winnipeg Free Press in the 1890s.

Stalling revenues meant that the company had to cut its distribution to unit owners in late 2006. Then it was hit with another whammy as the federal government announced that it was going to eliminate the tax advantages of the trusts by 2011. Speculation immediately began that the company was on the block and, in March, Sifton confirmed this. However the smart money was on the possibility of Torstar Corporation buying the chain to add its stronger properties to the ballooning Metroland chain. In fact, it has been fierce competition from Torstar that had helped, in part, to pare down revenues for Osprey and put it in play.

Quebecor paid the equivalent of $7.25 a share, a 30.6-per-cent premium over the closing price of the units on March 5, before Osprey announced it was reviewing its strategy.

Essentially, the purchase means that the Osprey papers will be rolled into what is sometimes called the Sun chain, although it includes Le Journal de Montreal and Le Journal du Quebec, the London Free Press as well as the Suns in Toronto, Ottawa, Calgary, Edmonton and Winnipeg. As well, Quebecor owns a chain of free daily commuter papers under the flag 24 Hours.

TVA group eyes magazine expansion in rest of Canada

TVA Group, the largest and perhaps the most important magazine publisher in Quebec, part of Quebecor Media, will continue to be an aggressive acquisitor, but will be looking across the rest of Canada for magazine acquisitions, its chief executive officer Pierre Dion said Friday. He told the company's annual meeting on Friday:

"We have reached a certain maturity in Quebec with high penetration in magazines and in television," Dion told shareholders at the annual shareholders' meeting.

"We're going to continue to look at specialized chains in Quebec because there's good progression there. Logically, what remains for us is expansion in English Canada," he said.

Good news, we suppose, for any publisher looking to sell magazine properties in the rest of Canada. The competition -- and therefore the price -- just went up.

The magazine division was created in 2002 by the merger of Publicor and TVA Publishing.

New French language tween 'n' teen title launches

The hot parenting category continues to grow with the launch by the Publications TVA division of Quebecor Media of a new French-language title called Espace Parents, and accompanying website EspaceParents.ca. It will concentrate on "tweens and teens" and anyone who lives with them. According to a story in Media in Canada, circulation is 55,000 copies and the children's fashion company Souris Mini, is putting a pullout section into every issue. Other premiere advertisers included Groupe Jean Coutu (PJC), Journal de Montréal, Kimberly Clark, McDonalds, Nestle, and Warnaco of Canada Company.