Our credo
In line with this, as an introduction, I'd like to share with you the credo of the management of Transcontinental Media and our parent company, Transcontinental Inc., as well as the team of journalists across Canada who work at our 11 dailies, our 128 local and regional publications, including 74 weeklies, our 37 magazines and our web portals. The credo is as follows:
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As a news publisher, Transcontinental Media believes strongly that factual, verifiable and quantifiable information is at the heart of the production – and success – of all our publications. In our opinion, information is not just another product. It engages the social responsibility of the publishing entity and, through its quality, contributes directly to the health of a democracy.
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The most notable feature of our corporate culture is our commitment to providing readers with quality information. I would even say that this is the foundation of our business success. At Transcontinental, we believe in a very simple principle: the right information leads to good financial health, which, in turn, sustains growth.
It was because of that solid financial foundation that Transcontinental was able to conclude the biggest deal in its history last year, acquiring the 12 local and regional newspapers of CanWest, including 10 daily newspapers and their related publications in the Atlantic provinces and Saskatchewan, for a total consideration of $261 million.
That transaction strengthened our position as the fourth-largest print media group in Canada, with revenues that will reach $500 million in 2003, and as Canada's second-largest publisher of local and regional newspapers. It also brought those newspapers and their experienced teams of journalists into a company that believes newspapers have a future, with an editorial philosophy that defends the superior interests of the communities we serve and the need for quality information.
On the Canadian scene, Transcontinental can be considered a new voice, an emerging player in the media industry. In 1997, for instance, our revenues were only $66 million. Acquiring the CanWest newspapers helped strengthen diversity and plurality in our industry, and would not have been possible without our healthy financial position.
In our opinion, having diverse and multiple sources of information in the era of the Internet and the proliferation of specialty TV channels is one of the best ways to guarantee the public's right to free and quality information. However, to be a real player in a market dominated by globalization and the existence of huge integrated media corporations, that diversity must come from players who have the financial capacity to back their ambitions and who can, by their presence, act as a counterweight to the great media empires. In particular, by new players like us, whom I would describe as a medium-sized company in the media industry.
It is this position, briefly sketched out by our credo and illustrated by the acquisition of the CanWest newspapers, that I would like to talk about in the next few minutes.
Size is relative
First observation: when it comes to Canadian companies, size is relative.
For example, Transcontinental is Canada's biggest publisher of consumer magazines, and the second-largest publisher of magazines all categories combined, with 22% of the market. We are also the second-biggest publisher of local and regional newspapers in Canada. In fact, we are the only Canadian publisher who has a presence in all ten provinces.
Transcontinental is thus solidly grounded in its news and information activities in its various markets. And size is essential to maintaining growth and competitive position. However, while our size may be notable in terms of the Canadian market, it is relative indeed on the North American or world scales.
There is, for example, not a single Canadian company among the world's top ten media companies. Even in North America, Transcontinental is but a bit player in a cast of superstars. And every week, People Magazine, owned by Time Warner, publishes more copies than all Canadian magazines put together.
Nevertheless, these are the big players our magazines compete with every day. To ensure its success, Transcontinental has chosen to concentrate on specific niches, but this strategy is no defence against competition. Market dynamics force us to keep decreasing our production costs, foster synergies among our publications, and constantly increase our product range and market share. It's all part of the daily challenge.
Our magazines are among the most respected in the country, in both official languages: Canadian Living ,Coup de pouce ,Elle Canada ,Elle Québec ,Style at Home ,Décormag ,Homemaker’s ,Madame ,TV Guide ,Le Bel Âge , to name just a few. In addition to their general contribution to providing diverse sources of news and information, these magazines give Canadians in both languages a Canadian perspective, on the issues that concern them and are fundamental to their identity. But our main competitors are American magazines with much greater resources and power to attract than we have. For example, Cosmopolitan sells more than 253,000 copies a month in Canada. Prevention has a Canadian circulation of 184,000 copies, Martha Stewart Living , 165,000, Oprah , 162,000, People , 170,800, Teen People , 126,400.
In her preliminary remarks, the Honourable Chair of the Committee, in talking about the quality and diversity of information that Canadians require, asked the question: "Are there political interventions that, without restricting freedom of the press, could or should be changed to meet the needs arising from these new realities?"
My immediate response is that the drastic cuts in subsidies to magazines and publications announced by the Canadian Heritage minister on July 8th was regrettable from every perspective. For Transcontinental alone, it represents a net loss of close to six million dollars in less than 24 months!
This decision will lead to profound upheaval in the magazine industry in Canada and constitutes, in my opinion, an unplanned change in the cultural policy of the Canadian government.
Given the unprecedented domination of American culture and its formidable financial resources, what we need from the Canadian government is a structured approach that allows us to develop long-term business plans.
Another factor that must be considered is the digital extensions of our conventional operations. If we are to ensure that European and American sites do not dominate Internet content, we must keep investing in the technological infrastructure necessary to ensure our place. But according to a study by Forrester Research, conventional media must commit hundreds of thousands of dollars when launching a website or portal. That kind of investment is only possible if a company is large enough and has the commensurate profits and resources.
Combining our forces versus excessive concentration
So one thing is clear: the economic environment in which Transcontinental Media operates and the factors that explain the many mergers and acquisitions in the media industry, here as in other countries, are beyond not only our control, but the control of governments as well.
Some will be of the opinion that excessive concentration of media ownership could lead to a decline in the quality and diversity of information available to the public. However, we do not believe that media mergers have reached an excessive level in Canada.
It is our firm conviction that by combining resources and strengths, as exemplified by an emerging player like Transcontinental Media, we can maintain diversity, continually raise standards of quality, offer continuous training, provide access to better resources and sophisticated technologies, and so forth. In short, it gives us the tools and resources we need to continually improve the quality of information we offer our readers while remaining a strong player in an extremely challenging market.
So in our case, media ownership is not a factor with respect to influencing public opinion. I would even say that, given our line of conduct and the very nature of our weeklies, which provide local and regional information, we offer a forum for voices that would otherwise not be heard. In other words, we contribute to a plurality of opinions at the local level.
Let me also add that by combining resources, we have also been able to continue papers in some communities that would, if they were owned by a sole proprietor, have had to close. Yet these papers often offer the only record of local, municipal or regional history.
A sense of community
This leads me to the cornerstone of our publishing philosophy, building the sense of community.
Our philosophy is simple: what is good for the community is good for the paper and for Transcontinental. We are aware of the role we play in preserving the cultural heritage of the communities we serve. We have in fact made it central to our mission.
For instance, the number of local causes and events that receive support from our weekly papers is simply phenomenal! All community organizations count on “their” weekly to publicize themselves and their projects. We consider it our duty to respond to that need, at the very least by publishing a calendar of events and often by supporting them as a sponsor. Plus, in many cases, an article is published in the paper.
So it's not surprising that our publishers and a number of their colleagues are very active in the community. I'd like to mention that two of our publishers, Caroline Andrews, from the Ottawa Business Journal , and Jean Touchette, from the Progrès in Saint-Léonard, have each received the Queen's Golden Jubilee Medal for their involvement in their communities.
Because of the size and strength of our network, we also embrace larger causes, sometimes even participating as partners in government endeavours. For example, we helped launch the "Quit and Win" challenge organized by the ACTI-MENU health program, providing advertising space worth more than $100,000. This very successful program aims to help people quit smoking.
In August, during the flooding in the Bois-Francs areas, our managers at La Nouvelle ,L’Union and L’Avenir de l’érable took the initiative of launching an appeal to the community by setting up a Flood Aid fund in cooperation with the Red Cross. The idea was to help families and individuals affected by the flooding return to normal life by providing food, clothing, medical assistance, children's toys and school supplies, and by cleaning and repairing homes, etc. We raised $275,000, which was $75,000 more than the initial ambitious target.
In Newfoundland, we again worked with the Red Cross to help residents of Badger, the town that was frozen in ice this past spring. The two dailies we publish on the island, one of which is the St. John’s Telegram , cooperated with other organizations and collected $1.6 million for the victims of the disaster.
I could give you many more examples of similar partnerships initiated in recent months by our papers in Nova Scotia, New Brunswick, Prince Edward Island, Manitoba, Saskatchewan, Quebec and Ontario. We believe it would be detrimental to alter the community fabric that local papers help weave – papers whose continued existence, even in the extremely competitive environment described earlier, is made possible by combining strengths and resources.
I'd like to mention in passing that, for the second year in a row, Transcontinental was recognized by Corporate Knights as one of Canada's most socially responsible companies.
In conclusion
It is our opinion that in Canada, as elsewhere, the creation and consolidation of larger entities is not yet over. Under the circumstances, Transcontinental plans to pursue business growth and increase both its number of publications and market share, to the extent that resources permit.
I mentioned before that we see quality information as essential to profitability. And a company's size, resources, economies of scale and profits generated are all factors that contribute to producing quality information for public consumption. As a publisher of magazines and newspapers, Transcontinental has achieved a critical mass that makes the company a viable alternative to the huge media groups with which we compete every day. Our competitive position must not be weakened by additional regulatory restrictions.
This is particularly important because the critical mass so necessary to both content production and revenue generation also serves to protect our culture. In this age of globalization, Internet and content standardization, the size of our company further ensures that we can continue to develop and disseminate cultural products and services for Canadians.
How can we ensure that mergers do not prejudice the public's right to obtain quality information? We believe that the role of watchdog over the public's right to quality information should not be left to government alone.
It is important not to confuse the right of the public to freely access quality information with the right of enterprise to freely conduct business in a market economy. Above all, this right must not serve as an excuse for undue government interference in the legal transactions between two companies, merely because they happen to be media enterprises. We already have the Competition Bureau to monitor business activity in the economy. It is our concern that excessive regulation would result in the baby being thrown out with the bath water, as it were.
