Transcontinental sheds Atlantic newspapers

TORONTO • Montreal-based publisher and media company Transcontinental Inc. has sold its portfolio of publications in Atlantic Canada to SaltWire Network Inc., the publisher of the Halifax Chronicle-Herald newspaper.

The financial terms of the deal, which will see 28 newspapers and digital websites in Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and New Brunswick change hands immediately, were not made available.

SaltWire will also acquire four printing plants, and take control of commercial printing operations in Newfoundland and Labrador in addition to distribution operations for the publications in Atlantic Canada.

Drew McReynolds, an analyst at RBC Capital Markets, wrote in an investment note that the “transaction is fully consistent with the company’s increased focus on scaling its packaging platform while harvesting its printing platform.”

Prior to the transaction’s completion, RBC expected Transcontinental’s media segment to generate $ 263 million in revenues and $18 million in earnings before interest, tax, depreciation and amortization during the 2017 fiscal year. That would represent approximately 13 per cent of the company’s consolidated revenue and five per cent of EBITDA.

With the sale, McReynolds said Transcontinental gave up approximately 25 per cent of its media revenues and a “slightly higher percentage” of media EBITDA.

Transcontinental’s stock was up 0.45 per cent in early trading to $ 24.68 on the Toronto Stock Exchange. The company will maintain ownership of two printing plants that operate in its printing division in the region. RBC believes the transaction will have a neutral impact on Transcontinental’s stock.

Meanwhile, newsroom workers at t he Halifax Chronicle-Herald have been on strike for 16 months. The Halifax Typographical Union, the union that represents the striking employees, criticized the purchase as a sign that SaltWire Network Inc. is in a better financial position than it has claimed during collective bargaining negotiations.

“We were told that the Herald’s demise was imminent if it didn’t immediately cut wages and other benefits to newsroom staff,” said Ingrid Bulmer, president of the HTU, in a statement. “Apparently, that was a total fabrication. The company is not struggling but is instead planning to expand.”

A total of 54 members of the HTU have agreed to changes in wages, pensions and their union’s responsibilities, but that has not been enough to close a deal.

The Chronicle Herald, which was founded in 1874, has continued to publish, using a combination of press wire stories and freelance and contract workers.

Approximately 650 Transcontinental employees in Atlantic Canada are part of the sale to SaltWire, and they will receive an offer from new ownership.