Magazine article Editor & Publisher

Cross-Media Ad Sales Drive Deal in Canada

Magazine article Editor & Publisher

Cross-Media Ad Sales Drive Deal in Canada

Article excerpt

CanWest brings one-stop shopping to markets of the Great White North

In just 20 years, Israel Asper built CanWest Global Communications Inc. into one of Canada's biggest media forces, with a 10-station broadcast TV network stretching from coast to coast. More recently, the company has diversified into radio, cable TV, interactive media, and film and TV production -- and it has expanded outside Canada.

Missing from its portfolio, however, were newspapers. So when another Canadian media titan, Hollinger International Inc. Chairman Conrad Black, decided earlier this year to shed most of his smaller papers in Canada and the United States to focus on his major metropolitan titles -- the Chicago Sun-Times, the London Daily Telegraph, and the Jerusalem Post -- Asper saw a chance to fill that gap.

In Canada's biggest media deal ever, CanWest agreed to buy most of Hollinger's Canadian newspapers, plus 50% of the National Post and other assets, for $2.4 billion, which computes to a multiple of 10 times EBITDA (earnings before interest, taxes, depreciation, and amortization) in the case of the newspapers.

Separately, Hollinger announced sales of its remaining U.S. community newspapers, excluding the Sun-Times and its related papers, to four regional publishing groups: Bradford Publishing Co. in Bradford, Pa.; Community Newspaper Holdings Inc. in Birmingham, Ala.; Paxton Media Group in Paducah, Ky.; and Forum Communications Co. in Fargo, N.D. The price paid for the 11 dailies and related publications was about $215 million, representing a multiple of more than 12 times EBITDA. Although Black has maintained all along he will hold on to the Chicago group, the competing Chicago Tribune raised the possibility that Hollinger would eventually cast off the last of its U.S. holdings.

CanWest painted its latest transaction as the "ultimate convergence transaction," uniting print, Internet, and broadcast assets in a compellingly attractive package for national advertisers. The addition of newspapers to CanWest's multiple-media mix has led it to take a "quantum leap forward," President and CEO Leonard Asper, the company founder's son, said during a conference call with analysts last week. "In today's world, one has to own content," he added. "What we're trying to do is become the world's greatest content provider and strongest advertising company."

Asper compared CanWest's strategy to that of the Chicago-based Tribune Co., which took over the Times Mirror Co. …

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