Canada's competition watchdog clears Postmedia-Sun Media deal
26 March 2015Canada's Competition Bureau yesterday gave its green signal for media major Postmedia Network Inc's proposed acquisition of rival Sun Media Corp's English language newspapers and digital assets.
Following a 5-month review, the regulator concluded that ''the proposed transaction is unlikely to substantially lessen or prevent competition.''
"Given the importance to Canadians of competitive media markets, the Bureau conducted an extensive review of this merger. We found that advertisers and readers continue to value print newspapers, despite the growth of online sources as an alternative,'' the Bureau said in a statement.
''However, our review concluded that there would not be significant anti-competitive effects for readers or advertisers arising from the proposed transaction,'' it said.
In October 2014, Postmedia said that it had bought Sun Media's 174 traditional newspapers and publications including the Sun chain of dailies, the London Free Press as well as the canoe.com website and part of its sales team in Toronto and the printing facilities in Islington, Ontario.
This includes more than 100 community papers and small dailies in 18 markets.
The deal does not include Sun Media's now defunct television asset Sun News Network, in which it holds a 49-per cent stake.
Toronto-based Sun Media Corp, the publisher of Toronto Sun and Calgary Sun, is a leading newspaper publisher and a subsidiary of media giant Quebecor Media Inc. It publishes over 15 million copies each week in English and French and has 36 paid circulation daily newspapers and three free dailies in 9 of the 10 largest urban markets in Canada and almost 200 community newspapers and other publications.
Postmedia, also Toronto-based, is engaged in newspaper publishing, news gathering and digital media. The company was formed in 2010 by acquiring troubled media group Canwest's publishing assets.
Its assets include newspapers National Post, Calgary Herald, The Montreal Gazette, Vancouver Sun, Ottawa Citizen and magazines Financial Post Business, Living Windsor, online website Canada.com and others.
Postmedia's chairman of the board Rod Phillips said, ''This is an exciting day for Postmedia and for the future of Canadian media.''
Through the acquisition, Postmedia hopes to take on digital rivals such as Facebook, Google, Twitter, Yahoo and others who are dominant in the online advertising market.
Paul Godfrey, president and CEO of the company said Postmedia was not just interested in Sun Media newspapers, its digital properties were a big part of the attraction further adding that the new bigger media company will be the strongest newspaper chain in the country, ''ready to take on all comers.''
''Postmedia will be poised to better compete against foreign-based digital giants that have been disrupting the Canadian media landscape at the peril of distinctive Canadian voices,'' he said.
Postmedia will also get some valuable real estate assets which it could sell to reduce its debt burden which is close to half a billion.
In October, Postmedia said the deal has the support of its largest shareholders GoldenTree Asset Management, the New York-based hedge fund.
Godfrey had said that both the newspaper chains will continue to operate including the three major markets, Toronto, Ottawa and Calgary where they compete directly.
The regulator has issued a 'no action letter' confirming that it will not challenge the proposed transaction before the competition tribunal under the merger provisions of the competition act.
The transaction is expected to close in the next few weeks, subject to a number of conditions, Postmedia said.
Postmedia issued $140 million of debt subscription in October and $173.5 million rights offering last week to fund the transaction.