• by Erik Sass  @eriksass1, October 6, 2014

This week brought a major move toward consolidation of the Canadian newspaper business, as two of the country’s largest newspaper publishers are merging, with the announcement that Quebecor Media has sold Sun Media to rival newspaper publisher Postmedia for $316 million.

With its acquisition of Sun Media, Postmedia gains control of 175 English-language newspapers, specialty publications, and digital properties, including The Toronto Sun, The Ottawa Sun, The Winnipeg Sun, The Calgary Sun and The Edmonton Sun, as well as The London Free Press and free 24-hour dailies in Toronto and Vancouver.

The deal does not include Quebecor Media’s French-language publications, such as the Le Journal de Montréal and Journal de Québec, or Quebecor’s broadcast properties, TVA and Sun News Network.

Postmedia President and CEO Paul Godfrey stated: “We intend to continue to operate the Sun Media major market dailies and their digital properties side by side with our existing properties in markets with multiple brands as we have in Vancouver with the Province and The Vancouver Sun for more than 30 years. Our advertisers will have the opportunity to reach audiences across the country with a made-in-Canada option for their marketing programs.”

The deal still requires approval by regulators, including the Canadian government’s Competition Bureau. If it's allowed to proceed, the deal will consolidate almost half of the Canadian newspaper business in the hands of a single company. Sun Media or Postmedia owns 14 out of the top 25 Canadian newspapers by circulation, and in 2012, Quebecor and Sun Media held 30.8% of total daily newspaper circulation in Canada, while Postmedia held 17.9%.

For comparison’s sake -- Torstar Corporation, publisher of The Toronto Star among other newspapers -- held 21.4% of Canadian daily circulation, and the Power Corporation of Canada, the fourth-largest publisher, held just 7.7%.

According to the companies, in 2013, Sun Media had total revenues of $508 million, while Postmedia reported total revenues of $751.6 million in 2013. Like their U.S. brethren, both Quebecor and Postmedia have taken it on the chin in recent years. From 2011-2013 Quebecor’s total revenues from its news media business fell 23% to $7834 million, while Postmedia’s revenues in 2013 are down from $898.9 million in 2011. Postmedia expects the merger to create savings of $6 million to $10 million per year.