By Michael Hammond
Business Media Network
Canada's media landscape might be heading for dramatic change after CanWest Global announced it has entered into an agreement with Hollinger Inc. to buy its Canadian newspaper, magazine and Internet assets.
The $3.5 billion deal includes Hollinger's "metropolitan newspapers, magazines and Internet assets, and most of the community newspapers," the companies said in a statement Monday morning.
The sale also includes a 50% stake in Hollinger's flagship national daily, The National Post. The deal is the biggest Canadian media deal ever.
CanWest Global will pay $2.2 billion in cash and $600 million in shares for the Hollinger assets. The remainder of the deal will be paid in the form of a 10-year $700-million debenture.
In return, Hollinger will get a 15% interest in CanWest as well as a 6% voting stake. Hollinger's president Conrad Black will also join the CanWest board of directors.
The sale doesn't include Hollinger's French language newspapers and some of its community papers.
In a statement, Black said the deal is a win-win situation for both companies.
"This deal represents a remarkable merger of successful entrepreneurial cultures that can only magnify the prospects of our joint endeavours," he said.
Hollinger owns a number of big name dailies in Canada like The Ottawa Citizen, The Montreal Gazette and The Calgary Herald. In total, CanWest will buy 13 big-city dailies, 136 smaller dailies and weeklies and 85 trade publications.
The news follows speculation in the last few weeks that CanWest was in the market for some Hollinger newspapers. It also follows rumours that CanWest was interested in Thomson Corp.'s remaining daily newspapers holdings in Canada.
CanWest's Israel Asper said in a statement that both companies intend to meet with the CRTC immediately to ensure that all the broadcast regulator's conditions are met.
Late in the day, the Communications, Energy and Paperworkers union stated its objection to the deal, calling on the federal government to intervene.
"If allowed to proceed, this merger will result in an unprecedented and horrifying level of concentration of ownership in the Canadian news media," said Gail Lem, union vice-president and head of its media division.
The acquisition and merger of Hollinger's Canadian newspaper, magazine and Internet assets will create the largest multi-media news, information and entertainment content provider in Canada.
Combined revenues: $2.6 billion
Combined EBITDA : $688 million Combined employees: 8500
Daily paid circulation: 1,288,311
Canada's premier network - 69 million page views/month of national and local Internet portals The transaction is scheduled to close on or about Sept. 30. however, the effective date will be August 31, 2000. Integration of most entities included in the transaction will begin upon Closing, while other integration matters will be constituted on Jan.1 to accommodate calculation of certain purchase price adjustments.
The integration of canada.com and the other Hollinger Internet assets with CanWest's Internet assets will begin immediately.
The National Post (50%)
Halifax Daily News The Regina Leader Post The Telegram, St. John's
The Star Phoenix, Saskatoon The Guardian, Charlottetown Montreal Gazette Edmonton Journal Ottawa Citizen Vancouver Sun Windsor Star
The Province, Vancouver The Times Colonist, Victoria