In a deal worth $193.5 million, CanWest Global has sold its southern Ontario community newspapers and several small market dailies to Osprey Media.
The deal, which is expected to close mid-February, will provide CanWest with much-needed funds to reduce its debt. The deal included more than 20 community newspapers, four dailies and many related publications and assets.
ÔÇ£The purchase of these top-quality newspapers reinforces OspreyÔÇÖs position as a premier Canadian media company with newspapers and specialty publications serving over 1.3 million households across Ontario,ÔÇØ said Osprey President and CEO Michael G. Sifton in a release. ÔÇ£These papers are concentrated in southern Ontario, a perfect complement to our existing portfolio of similar newspapers in OntarioÔÇÖs north, central and eastern regions.
ÔÇ£They have high reader penetration, broad community reach and strong connection to their communities, similar to our existing newspapers,ÔÇØ he said.
TeachersÔÇÖ Merchant Bank and Scotia Merchant Capital, the founding equity investors of the Osprey Media Group, are providing the equity to finance the transaction. Teachers’ Merchant Bank is the private equity arm of the $68-billion Ontario TeachersÔÇÖ Pension Plan.
A release from CanWest estimates the EBITDA of the papers sold in the deal at approximately $22 million. Osprey’s newspapers will continue to contribute to, and receive news and editorial content from, CanWest News Service and Infomart, and to be represented in national advertising sales by CanWest Media Sales.
The release quoted Leonard Asper, CanWest’s President and Chief Executive Officer, as saying, “This sale to Osprey is consistent with our previously announced intention to divest non-strategic assets. The price, in our view, reflects fair value for these publications. While valuable in their own right, these properties are not central to the Company’s strategy, which is focussed upon creating and exploiting a multi-media presence in Canada’s larger urban markets, but they do represent a strategic acquisition to Osprey.”
Asper said that CanWest will continue to divest its ÔÇ£non-strategic assets.ÔÇØ
Osprey has already received all necessary regulatory approvals for the deal.
Canadian Community Newspapers Association President Jim Cumming, Fort Frances (ON) Times said the multi-million dollar deal fit in with OspreyÔÇÖs previous dealings in Ontario. ÔÇ£They seem to be continuing to focus their business by buying assets around their dailies,ÔÇØ he said. ÔÇ£This move provides some very strong competition between the three major groups in that area of southern Ontario ÔÇô Osprey, Metroland and Quebecor (Sun Media).
ÔÇ£In their previous moves, Osprey has focused on newspapers and thatÔÇÖs good for the industry,ÔÇØ he said.
ComBase President Elena Dunn said it is too early to tell what affect the CanWest-Osprey deal will have on the national readership research study, although it could be positive. No Osprey papers are currently participating in ComBase, while 12 British Columbia CanWest community papers are.
ÔÇ£I think that the relationships between Osprey and CanWest might change now,ÔÇØ said Elena. ÔÇ£Opposition to the study might start to disappear.
ÔÇ£IÔÇÖm hoping this will bring about a positive change as Osprey begins to own more papers, they may see it as more critical to have ComBase information on those markets,ÔÇØ she said.
Sale of Assets to Osprey:
The following publications have been included in the deal:
St. Catharines Standard
Niagara Falls Review
The Welland Tribune
New Hamburg Independent
Weekend Update (Niagara Falls)
The Tribune Extra (Welland)