Masthead News Archives
December 2005

December 21, 2005
Hollinger in talks to unload its 36 trade mags
VANCOUVER/CHICAGO—Many have kicked her tires but none has ever closed a deal to acquire Hollinger International’s (formerly Southam’s) mighty collection of 36 trade publications. However, a suitor based in Vancouver may be on the verge of succeeding where so many have failed. Publicly traded Glacier Ventures International announced this week that it’s in discussions with Chicago’s Hollinger International “on a time-limited exclusive basis” to acquire the company’s Canadian assets, including the Business Information Group and its three dozen trade titles and Web portal esourcecanada.com. BIG president Bruce Creighton declined to comment on the talks but acknowledged that his 100-plus staffers have been apprised of the situation.

In separate statements released on Monday, Hollinger International and Glacier announced that Glacier had come to terms to acquire a 50% interest in Great West Newspaper Group’s string of Alberta-based community newspapers for roughly $40 million. Hollinger held a 70% interest in Great West with Jamison Newspapers Inc. holding the remaining 30%. The deal will see both Glacier and Jamison splitting ownership of Great West, which owns more than 20 titles, mostly community newspapers but also altweekly mags See and Fast Forward in Edmonton and Calgary, respectively. The purchase price also includes a 50% interest in Fundata, a Toronto-based publisher of investment-fund information made available in electronic and print formats.

Both releases mention that Hollinger is in “discussions with Glacier concerning the possible sale to Glacier of its remaining Canadian assets,” including BIG. However, “no agreement has been reached concerning the sale of these assets, and that there can be no assurance that an agreement will ultimately be reached.” Tell us about it; BIG has been for sale several times since 1993 and never has a deal been finalized. This time is different, though, because Conrad Black is no longer in control at Hollinger. It was Black who, since acquiring effective control of Southam in May 1996, ultimately rejected a series of offers for BIG, claiming they were too low. He was looking for a multiple of 10 times EBITDA. Previous interested parties have included Rogers Publishing, venture capitalist Larry Tanenbaum’s Kilmer van Nostrand Co., former Southam exec Bruce Morrison and a management-led buyout by Bruce Creighton. Glacier, a former bottled water company, refocused on publishing with the arrival of former Southam exec Jonathon Kennedy, now Glacier CEO and one-time protégé of former Southam senior executive Don Babick, who now sits on Glacier’s board.

In its release, Glacier noted that it intends to finance the Great West deal by raising $50 million through a private share placement, expected to close by year end, and to issue another $30 million in common equity to cover the BIG deal, should it go through. BIG, with estimated annual sales of $35 million, would have an estimated sale price of $35 million. The deal would represent the greatest power shift in Canadian trade publishing history.

Industry reaction to the deal varies. One observer who did not want to be identified expressed surprise that current management at Hollinger International, already battling perceptions that shareholder interests were neglected by previous management, would sell any of its assets in secret, without the benefit of public auction, which can maximize the sale price. “The public appetite [for these assets] should have been tested,” said the observer. (Hollinger declined all comment.) Others wonder if BIG will be parted out following the deal, with Glacier cherry-picking only the very finest assets. Glacier CFO Orest Smysnuik declined comment. Mid-size publishers contacted by MastheadOnline who might be interested in various BIG properties said they have not been in talks with Glacier.

For an in-depth profile of Glacier and CEO Jonathon Kennedy, written by Rick Spence, see the January/February issue of Masthead.

December 20, 2005
Big changes at Quill & Quire

The new, standard-size Quill & Quire debuts with the January/February 2006 issue (above)

TORONTO—For the first time in about 30 years, St. Joseph Media’s book industry tabloid Quill & Quire will be getting a new trim size. Starting with the January/February 2006 issue, look for Q&Q to sport a more compact—and sometimes beefier—presence. Some issues will be perfect-bound, including this debut issue. Publisher Alison Jones says the change—including a redesign—was prompted by a desire to print on a more environmentally friendly paper stock (Legacy Brite is 100% recycled and is processed without using chlorine.). With the new paper about 10% more expensive, the decision was made to offset the higher price by reducing Q&Q’s trim size, taking the magazine from 10.75” x 14” to 8.25” x 10.75”. The redesign, spearheaded by editor Derek Weiler and art director Gary Campbell, was a necessary consequence.

The changes don’t stop there. A frequency adjustment from 12 to 10 times per year effective 2006 is primarily a reflection of what have been difficult times in the Canadian book publishing industry. “The

The old, tabloid format (December 2005 cover)

last two years have been tough on the ad side,” Jones says, “so that’s certainly put pressure on us to look at how we’re spending money. At the same time, we’re building a much bigger website, and that’s requiring much more frequent updating which is using up internal staff resources.” With the monthly frequency, the operation was “getting very stretched,” she says. With frequency at 10 instead of 12 times a year, more attention can be paid to Q&Q’s online activities.

“It’s not like we sat down and made all these decisions at once. It just sort of all came together,” she says.

Established in 1935, Q&Q is one of the few trade magazines in Canada that commands a predominantly paid circulation—of the 7,100 circulated copies, roughy 70% are paid, according to CARD.

December 15, 2005
Readers will pay more for mags that go green
VANCOUVER—A recent American survey showed many magazine readers are willing to pay up to 75 cents more for magazines printed on recycled paper. Twenty three per cent of respondents said they would pay such a premium; 24% would pay 50 cents more per magazine; 17% said they’d pay 20 cents more and 16% said they chip in an extra dime.

Neva Murtha, a campaigner for Market Initiatives—a recycled paper advocacy group based here—recently shared the survey results. She says she was pleasantly surprised by the numbers, but has seen growing acceptance of recycled papers among Canadian magazine publishers. She says several titles are considering printing on Leipa Ultramag, a 100% post-consumer recycled paper. Explore began using the Leipa stock for it’s October issue, and will use it exclusively throughout 2006. “People who don’t want to [use recycled papers] are still operating from a [belief] from 10 years ago when there were technical hurdles.

The telephone survey was conducted by Princeton, N.J.-based Opinion Research Corp. Survey calls were made Nov. 18-21 to a random sampling of 1,033 adults—515 men and 518 women, 18 years of age and older, living in private households in the United States. The margin of error at the 95% confidence level is plus or minus three percentage points.—Jeromy Lloyd

December 13, 2005
Highest court to render copyright decision
OTTAWA—The lawyer representing freelancer Heather Robertson in her landmark copyright case against The Globe and Mail expects a ruling by mid-2006.

Michael McGowan, who presented Robertson’s case to the Supreme Court of Canada last week, says it usually takes five to seven months for the court to issue a ruling. However, because one of the judges who heard the case is retiring, McGowan foresees a deadline of sorts.
Typically, McGowan says, when justices retire they have six months to participate in rulings for cases they’ve presided over. Justice John Major is set to step down on Dec. 25. “We think that they will make sure the judgment comes out before June 25 so he can participate,” McGowan says.

The lawsuit is a class action on behalf of virtually every freelancer who has had articles distributed electronically by The Globe’s one-time publisher, the Thomson Corporation. According to McGowan, the suit seeks damages of $100 million plus interest. Of the outcome, McGowan says he’s “cautiously optimistic.”

In 1996, Heather Robertson sued The Globe and Thomson for reproducing and reselling two of her articles in electronic databases without her consent. The case was appealed upwards through Ontario’s provincial courts to the Supreme Court. At issue is what electronic publication rights, if any, a freelancer keeps after selling articles to a newspaper. Robertson says her articles should remain under her individual copyright. The newspaper’s position, as reported by Globe reporter Richard Blackwell, is “that Canadian copyright law specifies that the paper can reproduce material it has purchased in ‘any material form,’ and that this includes electronic databases and CD-ROMs. The paper also says that freelancers agree to ‘implied licenses’ for electronic reproduction when they sell their stories.”

Currently, The Globe is permitted to archive the paper electronically to make back-issues available. Robertson did not take issue with the archiving, but sued over the placement of her articles on the Canadian Periodical Index electronic version, a CD-ROM, and Info Globe Online.
There were no clauses in her agreements for either article that dealt with electronic distribution. The Globe has since made all freelancers sign contracts granting it electronic rights to their stories.
—Jeromy Lloyd

December 8, 2005
Wire service picks up second magazine publisher
TORONTO—In a move that will boost revenue by syndicating content, another magazine publisher has partnered with The Canadian Press. Earlier this year, music magazine Chart via its website chartattack.com struck a deal with CP. Today, Toronto-based Kontent Group, which publishes Inside Entertainment, FQ and Sir magazines, announced that CP will carry its newly launched KP International, a daily wire feed of Canadian and international “arts-and-entertainment news and gossip items.” CP will also sell and market the feed, which has been active since Nov. 15. “We do not editorially treat the material,” says Dwayne Desaulniers, CP’s director of business development, noting that CP engages in an extensive screening process of a supplier’s editorial integrity, including fact-checking regimens, before entering into a partnership with it. Desaulniers says that while CP has about 250 of its own reporters, there are beats best left to those who have demonstrated expertise. And because CP clients (including newspapers, radio and television stations) have expressed a demand for entertainment news and gossip, approaching Kontent with a partnering proposal made sense, he says. Talks began in the spring.

In the case of Chart, CP markets and sells the Chartattack wire service, which supplies daily music news and reviews. When clients run stories from either Kontent or Chart, the attribution line at the end of the copy reads either KP International or Chartattack; in other words, the publishers retain their distinct identity.

Depending on the circulation or audience size of the client, purchasing these specialized feeds can range from $250 to $2,000 per month, says Desaulniers. CP then splits the revenue with the publisher. “I can’t tell you how thrilled I am do this with Canadian companies and Canadian writers. It’s fantastic for us to go to clients, especially in the field of music and celebrity entertainment, and say, ‘Here is material that is written for Canadians and by Canadians, it’s got Canadian angles… as compared to the amount of wire copy that’s out there that’s all American or from the U.K.”

December 6, 2005
St. Joseph Media moves toward TV extension
OTTAWA—The Canadian Radio-television and Telecommunications Commission announced yesterday that a specialty television license application by a numbered corporation controlled by the Gagliano family has been approved.

The Gaglianos own St. Joseph Media—the fourth largest consumer publisher in Canada, behind Transcontinental Media, Rogers Publishing and TVA Publications. The broadcast license is for an English-language program called WeddingBells TV. St. Joseph owns WeddingBells magazine, a thick national glossy established in 1979 and published twice a year. Group publisher Giorgina Bigioni could not be reached for comment so questions about whether the show will be produced inhouse or outsourced, when broadcasting might commence and whether St. Joseph has a broadcast partner or satellite carrier, remain unanswered. “The undertaking must be operational at the earliest possible date and in any event no later than 36 months from the date of this decision [Dec. 5, 2008],” states the CRTC ruling.

The broadcast license will be issued once the company (i) secures an agreement with a program distributor, and (ii) informs the CRTC that it is prepared to broadcast.

December 1, 2005
Rogers to join battle of celebrity weeklies
TORONTO—In what’s being described as a “long-term” licensing agreement with a British publisher, Rogers Publishing chief executive Brian Segal says he’ll be introducing a Canadian edition of celebrity weekly HELLO! magazine in August 2006. Circulation will be entirely via newsstand with a target of 25,000 copies per issue in the first year.

The news comes just months after the North American landing of Brit celeb glossy OK!, which launched a $20-million marketing campaign in the U.S. and Canada this past summer. In October, Torstar entered the fray with Weekly Scoop. The category, Segal says, is fast-growing. “Last year, 20% of all newsstand sales revenue in North America came from celebrity titles. This year the data suggests it will be 30%. So, that’s a huge increase.” On average, about 60% of the content will come from the U.K. edition. Segal says this will not be a Canadian-content play, so it will not be seeking to access the Canada Magazine Fund (which requires high CanCon levels). Hiring is currently underway to fill about 22 HELLO! Positions at Rogers, including a 10-person editorial team that will Canadianize the existing food and style sections of the magazine as well as cover close-to-home celebrity action. HELLO!’s reputation is for positive coverage of the rich and famous, so don’t look for thicket-obscured shots of Prince Charles’ buttocks or the latest Hollywood boob job. But do look for Prince Charles. “We think Canadians love royalty,” Segal says.

HELLO! is a wholly owned subsidiary of the Spanish magazine that started it all in 1944—HOLA!—and it is with the U.K. operation that Rogers has forged the licensing agreement.

Segal says the U.K. edition of HELLO!, which currently sells about 7,000 copies a week on Canadian newsstands, will cease coming into this country once the Canadian edition launches. (That’s a non-compete arrangement that Transcontinental Media might like to have in its joint venture with Hachette Filipacchi Media; currently Elle and Elle Canada compete on Canadian newsstands.) Segal says the Canadian edition will have a strong presence in supermarket chains, and gives the company a second weekly (in addition to Maclean’s) to add heft to its overall newsstand presence.

One of the reasons Rogers is making the announcement now rather than later is that “once you’re out buying [supermarket] racks and hiring staff, then it gets out what you’re doing and so we felt that we may as well get out and ahead of it,” Segal says. “Also, we wanted to signal the advertising community that we’re going to be in market for the fall [of 2006].”

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