Black deal raises ownership fears: Larry Black on the concentration of control of Canadian Newspapers (CORRECTED)

CORRECTION (PUBLISHED 25 MARCH 1993) APPENDED TO THIS ARTICLE

THE deal proposed by Conrad Black's Hollinger group to sell a stake in Canada's Southam newspaper empire to Power Corp has raised fresh concerns about concentration of ownership in the country's press.

Control of Canada's leading newspapers has been concentrated among fewer and fewer owners in recent years, and the planned deal would accelerate that process considerably. Southam is the biggest newspaper owner in the country, publishing 17 daily titles.

Like the United States, the Canadian newspaper market consists of large daily papers in each of the country's major cities. Only two Toronto newspapers, the Globe & Mail, owned by Thomson, and the Financial Post have even limited national circulation.

Outside Toronto, where three daily newspapers compete for readers, the English-language market is dominated by Southam while Montreal-based Power and another of Mr Black's companies, UniMedia, split control of the quality French-language market.

Last week's deal, in which Power, headed by Paul Desmarais, a financier, announced it was buying a stake in Southam equal to that purchased last November by Hollinger, took the industry by surprise. Mr Black and Mr Desmarais are said to have agreed to Power's investment in Southam last week in Florida, where both own holiday homes. The two have announced a no voting agreement concerning their Southam shares, which total 37.4 per cent of the company after dilution.

But between them, they would control the quality newspapers of six of the eight largest cities outside Toronto, including Montreal, Vancouver and Ottawa. An alliance of Power Corp and UniMedia would also own the leading quality newspaper in each of Canada's French-speaking cities.

In Montreal, for example, they would control both the Gazette, the city's only English-language newspaper, and Power's La Presse, the leading quality paper in French Canada. In Ottawa, Canada's capital, Southam owns the Citizen, while UniMedia publishes Le Droit.

While Canada is relatively active in monitoring competition among the broadcast media, it has no regulatory panel that examines monopolies and mergers in the newspaper market. Despite a public outcry, a nationwide deal involving Southam and Thomson in 1979 resulted in several mergers and newspaper closings, leaving only Toronto and Montreal with competing quality newspapers.

But there is an element of competition. Two chains of tabloids, owned by the Quebecor and Maclean Hunter publishing groups, publish second newspapers in six cities. Canada's largest newspaper, the Toronto Star, also remains independent of the big chains, having abandoned its own bid to take control of Southam last year.

While Canadian press magnates like Lord Beaverbrook, Baron Thomson and more recently Mr Black have long been active outside its borders, notably in the United Kingdom and United States, Canada limits foreign ownership of its newspapers to a 25 per cent stake. The Financial Times owns a 19.9 per cent stake in the Financial Post.

True to form, the late Robert Maxwell - a partner with Quebecor in a short- lived Montreal newspaper venture four years ago - complained loudly about the limit.

CORRECTION

Southam

An error was inadvertently repeated yesterday whereby we wrote that Hollinger had agreed to sell Southam shares to Power Corporation. Southam has agreed to issue shares to Power from treasury.

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