A joint operating arrangement in Vancouver, Canada, that began in 1957 changed what had been competition between three daily newspapers into an incremental monopoly with one owner now
publishing two titles. This gradual concentration of ownership was subject to government
inquiry three times in 35 years and is a case study in regulatory ineffectiveness. But the
competitive advantage has not allowed Pacific Press to maximize profit or even revenue. The countervailing power of unions has worked to restrict market penetration with repeated
publication interruptions. The result has been steadily declining circulation of both titles
in the 1990s.

Monopoly is considered a preferred position in business, as the proprietor can set both price charged and quantity produced.  Anti-combines legislation is intended to prevent firms from joining forces to influence the market for their products to the public detriment. In the 1930s, a trend to joint production of newspapers began in the U.S., and by 1957 there were 22 cities with two newspapers publishing from the same facility.  In 1969, the U.S. Supreme Court found such arrangements to be a violation of anti-trust legislation and intense lobbying prompted Congress to pass the Newspaper Preservation Act of 1970 exempting newspapers from the law.

In Canada, there is no such legal exemption but in the 1950s the Combines Investigation Act was of little effect as enforced by the Restrictive Trade Practices Commission. Economic forces converged in 1957 to create the country's first joint newspaper operation at Pacific Press in Vancouver, British Columbia on the country's West Coast, where a complex deal saw three newspapers combined into two -- one family-owned, one part of a chain.

The agreement providing for joint production of the Vancouver Sun and Province was scrutinized at length by the federal combines watchdog, but only the most blatant examples of monopoly excess were disallowed. When dual ownership ended 13 years later in a spate of deals that saw the corporate partner acquire complete control of the company, a Royal Commission was called to examine growth of the chains. It called for laws to curb the trend, but none were enacted.

The culmination of the complete corporatization of the Vancouver newspaper market came in the early 1990s when the parent Southam chain bought up most of the rest of its competition -- several weekly community papers -- in an acquisition which was only partially blocked by government in yet a third inquiry. Then in 1991, Southam moved its afternoon broadsheet to morning publication in direct "competition" with its morning tabloid in an attempt to boost sales.

But despite the obvious business advantage of a government-sanctioned monopoly the "Siamese twin" newspapers have been unable to maximize their market share, as both continue to lose circulation and Pacific Press loses millions of dollars. The most fractious newspaper labor relations in the industry, marked by repeated lengthy shutdowns of both papers, have stunted market penetration by the paired papers. Combined with questionable management and marketing decisions, the arrangement has been called a "licence to lose money."

This paper examines the events and circumstances which turned what had been a competitive newspaper market in the 1950s with three competing newspapers into a corporate newspaper monopoly in the early 1990s.

Pre-Pacific Press

The morning News-Herald, which was founded as a co-operative in 1933 by journalists from several failed dailies, was by far the smallest of the three daily newspapers in Vancouver in 1957. It had struggled financially since its inception and was bought by the Sun in 1951 for its newsprint quota and sold off to the Thomson chain the next year. Its circulation dwindled throughout the decade to slightly more than 30,000 when it published for the last time June 15, 1957.

The Sun was rescued from bankruptcy in 1915 by former Winnipeg bellhop Robert J. Cromie, then personal assistant to one of its owners. He built the paper by buying and closing its competitors and on his death in 1936 left the city's second-largest newspaper to his sons. A veteran newsman described the Sun of the 1930s as, "the working-man's paper -- at once raucous, rambunctious and dedicated to the proposition that the simple business of a newspaper was to raise hell."

At that time the dominant Vancouver daily was the Province, founded in 1898 and acquired by the Toronto-based Southam chain in 1927. The same journalist's description of the Province put its style in sharp contrast to its competition.
 

Staid, stodgy and eminently respectable, the Province was in the 1930s regarded as the leading daily newspaper west of Toronto. It viewed events with quiet objectivity, rarely raised its voice, and generally reflected the conservative stance of the Establishment.
 

Circulation of the Province began the 1950s under 100,000, and by 1957 had not quite recovered its pre-strike level with almost 123,000 in sales daily. By then, however, the Sun was circulating almost 200,000 copies a day.

The Deal

Robert Cromie had managed to convince Southam to enter into co-operative arrangements as early as 1933, when the papers agreed to "stabilize" circulation, with the Sun set at 86 percent of Province sales. The authorized history of the Southam chain described the deal: "Either paper making gains...would cease efforts to get new subscribers while the other took steps to catch up."  Cromie unsuccessfully urged Southam executives to also conspire on advertising rates.

On the labor front, the three papers bargained jointly with Local 226 of the ITU and signed identical contracts. When the storm clouds gathered over Southam after the war when it continued to publish its Winnipeg paper despite an ITU strike against it, the three Vancouver papers formed a coalition and vowed to act as one against any union action. But according to the Southam history, their solidarity was short-lived.

Instead of "complete co-operation" with the Province, new Sun publisher Donald Cromie, who had assumed control on his father’s death, broke ranks with his rivals. Not only did the Sun continue to publish during the six-week Province strike, but according to a subsequent Sun publisher hired a battery of telephone solicitors to get more classified ads, even if it meant throwing out retail and national linage. "This was in keeping with the old newspaper maxim that 'the paper that gets the classified gets the readers.'"

One thing that kept the Sun from pressing the advantage against its hobbled rival was a shortage of newsprint which saw each newspaper allotted a quota. Cromie solved that problem in 1951 by buying the News-Herald and using its newsprint to expand Sun circulation.  When it had outlived its usefulness, Cromie sold the morning paper to the Thomson chain a year later.

After the strike, the Province launched a "vigorous campaign to regain its position," according to future Sun publisher Stuart Keate. "There began a decade of frantic competition which did little credit to either paper."  According to a subsequent inquiry, the Province nearly quadrupled its promotion expend-itures after the strike to an average of almost $250,000 annually for the next six years and in 1953 doubled that again to more than $500,000 but was only able to increase its market share of circulation from 36.9 percent to 40.1 percent.  The Sun countered every contest and giveaway the Province came up with and was able to maintain its lead.

According to Arthur Moscarella, who was brought from Winnipeg by Southam to be Province publisher in 1951, the papers were "at each other's throats all day long" and soon sought a way out of the vicious circle of competition.  Moscarella told the government inquiry into the Pacific Press merger that he first had discussions with Cromie around 1953 or 1954 about "how we could rationalize the Vancouver newspaper situation."  Cromie was again pressing Southam soon after the strike to divide up the market, according to the company's historian.
 

As early as 1950 Don Cromie noted casually in a letter to [Southam president] Philip Fisher, dealing with the TV threat to ad revenue, high competitive costs and other things: "Perhaps you'll find it worth considering whether the Vancouver public would get its best newspaper service and value from a co-operating morning-evening operation." Nothing came of this at the time, but by 1955 principals of the two papers had reached one point of agreement: They would like to agree on something.
 

According to the Southam history, negotiations between Balfour and Cromie came to a climax aboard the latter's yacht Tempest IV on a four-day cruise of Howe Sound, near Vancouver, in September, 1956: "In an outboard skimmer in the middle of the Sound the two shook hands on the principle of the deal."

Details of the joint venture had still to be worked out, and early the next year Cromie and Balfour agreed in a telephone conversation to "formation of 'Company X' to take over the physical assets of the Province and Sun, the Province to switch to the morning position and profits to be shared equally."

But because of the Sun's dominant position, an "equalization" payment was required to compensate it for going into equal partnership with its lesser rival. As Cromie told the story almost 30 years later, he was holding out for $4 million, while Southam was offering only $3.5 million when Southam president Philip Fisher telephoned from Toronto and offered to decide the amount in a long-distance coin flip, with Cromie tossing. Recalled Cromie: "I was a gambling man, but half-a-million was a bit too much for my blood and I balked."  Eventually the parties settled for $3.85 million.

Almost lost in the shuffle was the morning News-Herald, which was about to be displaced by the Province. Lord Thomson of Fleet, finding the competitive market in Vancouver not to his liking, had offered to sell several times to both rivals, and upon the merger agreed with Southam to sell it the assets of the News-Herald -- its presses, subscription list and morning rights to the Canadian Press wire service -- for $260,000.

The formal agreement to create Pacific Press was signed on May 24, 1957 and on June 15 the News-Herald published for the last time, replaced by the Province the following Monday morning. In a front-page statement, Cromie promised the Sun would retain its editorial vigor and compete with its new business partner as strongly as before. "We will continue to scoop them with the best columnists, editors and news breaks...We shall continue our superior condescension towards the conservative policy vision of The Southam Company."

Others remained to be convinced that the competitive spirit would live on through the business arrangement. Columnist Scott Young of the Toronto Globe and Mail wrote: "This character-retention will be quite a trick, something like watching a wrestling match between Siamese twins."

Press reports of the agreement moved the government watchdogs to action. T.D. MacDonald of the Restrictive Trade Practices Commission wrote to both publishers on March 25, advising them that "such a merger would put me on inquiry."   Proceedings were instituted on June 18, with a formal demand for information pertaining to the amalgamation.

The arrangement was alleged by the combines branch to "operate to the detriment of the public because the public has been deprived of a choice among independent competitive newspapers." Pacific Press was alleged to "enforce arbitrary rules requiring certain classes of advertisers to purchase space in both newspapers if they wish to advertise." Finally, evidence indicated earnings by the Sun were used to subsidize operation of the Province, "and that advertising rates and selling prices of The Vancouver Sun have been raised to accomplish this result."
 
The publishers justified their collaboration as necessary to permit needed investment by both in costly new color printing technology and to ensure the survival of competing publications. After reviewing voluminous financial information and hearing other evidence and argument, the commissioners agreed and found "that as a business enterprise The Province did not have the prospects of earnings which would lead its owners to continue its operations indefinitely."  They recommended that in order to protect the public interest in separate newspapers and maintain the degree of independence contained in the agreements, a judicial order should be issued "which would restrain the parties from making any alteration in the agreements without the approval of the courts."  Such an order was never made, however, as the publishers promised to notify the Combines Investigation Branch of any proposed changes and to withdraw the requirement for national advertisers to buy space in both papers.

With government sanction, Pacific Press entered the 1960s intent on the next phase of its partnership, construction of a modern new home for its publications.

The 1960s: Settling in

The new printing facilities were planned for a square block in uptown Vancouver, across the Granville Street bridge from the downtown peninsula both papers had inhabited since their inceptions. The Sun and Province moved into the $10-million four-story structure, which boasted many modern innovations, on Christmas Eve, 1965.  Completely automated, a national printing magazine described how once delivered, newsprint "doesn't feel the touch of human hand until it is picked up as bundles of newspapers at the truck bays."

But Donald Cromie never moved into his view office on the new premises. Max Bell of Free Press (FP) Publications had coveted the Sun for years and, says Keate, pursued it "relentlessly."  In 1963, Bell caught Cromie in a "receptive mood," according to Keate, and he sold. "Cromie was running a profitable newspaper. But he wondered it he, as an independent, could withstand the long-term challenge of the Southam group."  Years later, Keate says Cromie conceded the decision to sell was a "great mistake...a virtual forfeit of his patrimony and millions of dollars," and offered to buy the Sun back, to no avail.  In 1986, Cromie told another reporter, "he still cannot understand why he sold...[adding] possibly with some exaggeration: 'Today I'm broke.'"

Part of the deal with FP was that Cromie could stay on as publisher "indefinitely," according to Keate, an arrangement which lasted six months. "Cromie labored under the delusion that he could sell his newspaper and continue to run it in his own way. Max Bell felt differently."  Keate says Cromie "blew up and quit" after memos from FP headquarters in Winnipeg imposed on the newspaper "sensible business principles."

The publisher's chair was vacant for three months before Keate was brought in from FP's nearby Victoria operation to find the Sun in a "restive and demoralized state."  He cleaned house by ousting long-time managing editor Erwin Swangard and resolved to change the editorial direction of the paper, which had been "content to needle the Province," and give it a more national and international focus. After Keate's retirement in 1978, a former Sun reporter judged his performance a success:
 

Over the previous 15 years, the (Sun) had become the most attractive-looking daily in Canada....More than that, The Sun had the best lineup of local columnists in the country. It built a solid core of seasoned reporters...and it always seemed to attract brighter young talent than the morning paper. It developed world-class cartoonists while The Province used art off the wire.
 

Production problems beset the new paper, but the cause of its closure 11 months later was more a result of the Pacific Press stranglehold on advertising. According to one magazine: "To all intents and purposes, advertising was nonexistent....On some days the paper did not contain $400 worth of advertising."

The challenge rebuffed, Pacific Press settled into its new building and proceeded to turn into a money machine, led by the Sun, which by 1969, under Keate's stewardship, was the second-largest newspaper in the country, circulating 261,000 copies.  A dramatic leap in classified ad linage boosted the flagship paper's profits, but the equal partnership with the Province served to siphon off the gains to support its weaker sister. According to Keate, under Pacific Press accounting, the Sun's $12-million profit in 1969 was first reduced by the $1-million loss by the Province. After taxes took half the remainder, the papers split what was left -- "a bizarre agreement which thus left the Sun with a bottom line of $2.75 million on its gross profit of $12 million and the Province with exactly the same reward on a loss of $1 million."

The Sun's FP owners demanded cutbacks in circulation of the Province, which as the morning Vancouver paper was flown to far-flung regions of the province at a loss. Province publisher Paddy Sherman countered with ingenious arguments, according to Keate.
 

He purported to show, from a maze of statistics, that the Province could produce a column of type cheaper than the Sun....Wound up and in full voice, Sherman managed to convey the impression that the Province was somehow carrying the Sun on its back....Sun directors often left the meetings chastened and resolved to do better.
 

The 1970s: A Decade of Labor Strife

A government report in 1981 characterized the 1970s as a period of "almost continual conflict at Pacific Press."  The problem was seen as a lack of trust, especially on the union side, brought on by the company's corporate structure, which saw the partner publications bargaining with each other at the same time they were negotiating with their unions: "There was difficulty on most decisions...management apparently agreed to an item one day and changed its mind the next.

Shortly after the contract expired in 1969, the unions took a strike vote, then on November 7 began a production slowdown. The next week, nineteen members of the union negotiating committee staged a 24-hour sit-in at the company board room to protest the company's wage offer. A second sit-in was held November 20 and production slowdowns continued, but by month's end a mediator had been agreed on. Talks broke down December 21 after only a few hours of face-to-face negotiations. A court injunction against the slowdowns obtained by the company February 11 only increased the problem and four days later Pacific Press closed its doors and locked out its unions.

Less than a week later, the idle journalists began publication of their own thrice-weekly newspaper, the Express. One Sun columnist who instead found work writing for a national magazine found the product a mixed blessing. "It was professional in appearance but stale in...content, scalped from radio broadcasts and out-of-town dailies. It attracted more advertisers... than [it] could handle...sold 100,000 copies and made bags of money."

The Express promised its own demise as soon as the dispute was settled, but with strike pay plus dividends from the Express and commissions earned on papers sold on the street, "many workers were reportedly earning nearly as much as they had made at their regular jobs."  In early April, talks resumed with the assistance of a mediator and an agreement was finally reached the next month. Publication resumed May 15 after a three-month shutdown, which reportedly cost Pacific Press $7.5 million in lost revenue.  A total of 70,000 man-days of work were lost, which cost $2.5 million in lost wages.  The Sun lost more than 13 percent of its circulation, falling to 225,000. The Province fared slightly better, losing just over 10 percent of its readers, dropping to 104,000. The morning paper of habit quickly more than made up the losses and by 1978 was selling more than 130,000 copies. The Sun never totally made up its losses.

In 1972, it took only two days for contract talks to break down over the issue of technological change. A strike began on November 7, but lasted only three days and was resolved after fifty-two continuous hours of bargaining.  Contracts in the mid-1970s proved problematic but with mediation were resolved without strike. One notable concession made by Pacific Press in exchange for switching to new "cold type" technology was guaranteeing for life the jobs of 290 regular printers displaced into such menial tasks as taking copy over the telephone.

Even into the 1990s, there would be 170 such guaranteed jobs, keeping the company's labor costs at 64 percent of revenues, compared with an industry average of less than 50 percent.

The tenuous calm only served to foreshadow the growing storm that would follow expiry of the contract in 1978. The bone of contention in the final bargaining round of the decade was restrictive "manning" clauses in the contract that required specified numbers of pressmen to be employed despite advances in technology that made them redundant. Pacific Press took dead aim at the "featherbedding" and bought expensive strike insurance. The pressmen struck on November 1 and the company locked out its other unions. The Express was resurrected for the occasion and reported in its first edition on November 3 that the company boasted of its "careful financial preparations for a long union-busting shutdown and the public be damned."

According to one published account, company negotiator Jerry Marr told his union counterpart:
 

"This is the year we're going to take you on. We've never been in as good a position in the past, and we don't expect to be in the future. We will take you on for one month, two months, three months" -- Marr was counting the months on his fingers -- "four months, five months six months. We've made the calculations and we can recover from a long shutdown."...Believe it or not, the pressmen didn't take Marr seriously.
 

The Sun lost more circulation as a result of the strike, dropping 6.8 percent from 242,000 to 225,500.  The Province  dropped 7.5 percent to just over 123,000.

But the biggest post-strike challenge was posed by a new publishing competitor. The weekly Vancouver Courier seized the opportunity and, luring away many Pacific Press journalists, began daily publication as a morning tabloid on July 4.  Once the Pacific Press dailies got back up to full speed, however, the Courier's days were numbered.

One unforeseen result of the shutdown was the forced idleness of the Sun's new publisher. Clark Davey had been brought in from FP's Toronto Globe and Mail, where he had been managing editor, to replace Keate on the eve of the eight-month shutdown. According to a magazine article by an Australian journalist who worked for the Sun during the 1980s, "during the strike, Davey caught the ‘marketing’ bug, and when the strike ended, the Sun's obsession with graphics, color and promotion began in earnest.... It was the beginning of the cosmetic approach to news."

The 1980s: The Marketers Move In

As the decade dawned, Thomson Newspapers won a bidding war with a young Conrad Black, among others, for money-losing FP Publications, paying $164.7 million.  That made Thomson, hitherto a collection of small-town monopoly newspapers, the largest chain in Canada, just ahead of Southam. Months earlier the parent company, cash rich from its North Sea oil investments, paid $640 million for the Hudson's Bay department store chain.  As a newspaper chain, however, Thomson was notoriously frugal and, according to one former staff member "overnight the bottom-liners began eating away at the Sun."  Thomson quickly moved to rationalize its new investment, merging its Victoria broadsheets into the Times-Colonist and selling off the Calgary Albertan to the upstart Toronto Sun tabloid chain.
 
What came next, however, convulsed the Canadian newspaper industry and again set in motion a government inquiry that provided an inside look at major media corporations. On August 27, 1980, Thomson announced it was closing its newly-acquired Ottawa Journal in the nation's capital, where it was in competition with Southam's Citizen. Simultaneously, Southam ceased publication of the Winnipeg Tribune, which had competed with Thomson's Free Press. At the same time, Southam bought Thomson's half of Pacific Press, making it owner of the Vancouver Sun as well as the Province.

Davey said in that day's Sun: "Given the hydra-headed nature of Pacific Press's corporate structure and problems it has created, the move to single ownership...was inevitable."

Province publisher Sherman denied there were plans afoot to fold the money-losing morning paper, but refused to speculate on prospects of turning it into a tabloid along the lines of the Toronto Sun, which had filled a niche after the Toronto Telegram folded in 1971 and had since expanded west to Edmonton and Calgary. Sherman noted "there appeared to be more interest 'not in real newspapers, but in the light and frothy kind that entertains you.'"

The corporate maneuverings shocked public and politicians alike and the day of infamy came to be known as "Black Wednesday." There were immediate calls for a Royal Commission to investigate and almost as immediate action by Prime Minister Pierre Trudeau to form one. Trudeau named Dalhousie political science professor Tom Kent, a former Winnipeg Free Press editor and long-time political mandarin, to head it. Kent quickly called country-wide public hearings to hold the parties to account.

Former FP president George Currie testified that his company and Southam did separate Vancouver market studies in 1979 and the cohabiting chains discussed many times "what should be done to break the logjam,"  according to a contemporaneous account.
 

Currie said his conclusion was to turn the Vancouver Sun into an all-day production, with the Province occupying a secondary role -- either as a morning tabloid or as a "mini-Globe and Mail. We would have to find a sharply-differentiated role for the Province to play....It was just losing too much money."
 

Three weeks later, Southam president Gordon Fisher was in the hot seat, denying suggestions that the Province was kept alive despite losing money to preserve the Pacific Press monopoly by keeping another newspaper from coming into the Vancouver market. "I guess...the existence of The Province prevents against the intrusion of the [upscale] Toronto Globe and Mail....But I don't think The Province would be a very effective blocker against the Toronto Sun."

Fisher admitted Southam had studied publishing a splashy morning tabloid at Pacific Press "but that he had promised to announce any corporate decision on the matter to Southam employees first....'To date Southam has not published that kind of paper. It would be a challenge for us.'"

The Royal Commission's report decried the increased concentration in the Canadian newspaper industry and recommended a Canada Newspaper Act to limit further expansion by the chains. A watered-down version of such a bill was drawn up in the dying days of the Trudeau administration, but never enacted.

Thomson and Southam were charged under the Combines Investigation Act with conspiracy to reduce competition, but the case ended in acquittal after the judge concluded the closures constituted "good business sense, not an illegal conspiracy."

Thus in the clear, Southam moved to maximize its Pacific Press investment. On August 2, 1983, all the studies and speculation culminated in the conversion of the Province to a colorful tabloid. The move down market proved astute, as circulation jumped almost 20,000. "Equally gratifying, according to publisher Gerald Haslam, is a healthy increase in ad linage that exceeds the paper's projections."

The Southam idea of a tabloid was not the racy type published by the Toronto Sun, featuring bikini-clad figure models on Page 3, but instead a "'family tab'...Haslam says the paper's research told him...is what Vancouver readers wanted."

The momentary success was tempered the following spring when the unions struck again, this time for seven weeks starting March 28, 1984. Southam president Gordon Fisher told the company's annual meeting the following month that Pacific Press had been "perfectly satisfactorily," profitable in past years and denied the company would use the strike as an excuse to close the money-losing Province.  The ultimate cost to Pacific Press of the shutdown was $5 million, however, prompting Fisher to warn the 1986 annual meeting: "The inevitable conclusion is that the Vancouver Province will not survive another strike at Pacific Press."  Employees were sent a copy of a presentation to the annual meeting which warned of cuts in production costs to reach an "acceptable" level of profit, citing the company's losses of $2.85 million in 1984 and $56,000 in 1985.

Haslam cited the biggest threat to Pacific Press profitability as competition for advertising from forty-seven suburban weekly newspapers that sprang up during the 1978-79 strike. "The result was fragmentation, and a lot of weeklies got rich in the process."  The counter-strategy by Southam was formation of a new company called Flyer Force to print and circulate direct-to-door advertising in competition with the weeklies.

Meanwhile, with the Province resurrected in tabloid form, Pacific Press turned its attention to the flagship Sun. More market research ensued, produced by companies more accustomed to other endeavours. According to one of its reporters, "The Sun hired pollster Martin Goldfarb to ask readers what they wanted, then set out to please them all."  Haslam, now "super-publisher" of both newspapers, set the Sun on the same course that proved successful for its morning twin. According to former Sun staff member Ian Gill:
 

Rather than building on a readership that for years had demanded more of it than of the Province, rather than fighting increasing acceptance of the Globe and Mail by its high-end readership, the Sun ducked down the same alleys as the Province . . . the "human" side of the news.
 

The result was creation of a system of committees to give journalists input into management decisions, including hiring. Meanwhile, the Sun paid pollster Angus Reid $100,000 to define its "target audience." The result, according to Gill's second Vancouver magazine look at the paper's malaise, was a study in "psychographics" that urged the Sun to pursue the "literate inquisitors" it found made up 21 per cent of its target market, according to Gill. "The Sun in fact paid Angus Reid all that dough to tell it to go upmarket and leave The Province to those whose lips move when they read the comics."

Still the Sun's circulation dropped, from a six-day average of almost 250,000 in the mid-80s to just over 210,000 by 1991. (See Table 1) More market research would only point out the obvious, long-overdue solution.

The 1990s: The Complete Corporatization

One result of the consultants' reports of the 1980s was improved corporate communications within Pacific Press. A company newsletter was begun, and in its third issue revealed the results of a study by Rodon Communications, which found the company's previous style "patterned on the traditional values of news reporting -- reactive and crisis-oriented....Information is power and jealously guarded."  The result, in addition to the newsletter, was a 24-hour phone-in line staffed by an answering machine for employees to air their views, and a series of forums designed to bring employees, union executives, market researchers and industry specialists together.

 The main focus was to convince the recalcitrant staff of the need to follow the marketers' advice and move the Sun to morning publication due to declining circulation. Market research showed the move would boost sales, although at the expense of the Province, the company circular declared.  Province editor Ian Haysom revealed its strategy to combat losses: "We can do that partly by continuing to target the younger end of the market and the suburbs."  By the time the switch to morning publication of the Sun was made, however, Haysom had crossed the hall to instead become its editor.

Almost a year after announcing the switch, Pacific Press finally made the move after, according to a local business magazine,
 

an enormous amount of hand-wringing and soul-searching, not to mention a consultation with North America's leading newspaper guru...on the basis of a veritable sea of expensive market research, it is still convincing itself that not only will both morning papers survive, but in the long run both will prosper.
 

The question many asked was why it had taken Pacific Press so long to move the Sun to mornings. A subsequent analysis in a national business magazine called the "years of dithering" one of the worst of "a series of other blunders in the 1980s."

Intrusion in the market by the nationally-distributed Globe & Mail and Financial Post had earned them 45,000 in sales daily in the Vancouver area, and Haysom allowed a glimpse at corporate strategy in admitting at the time: "It would not be in Southam's best interest to open up either end of this market."

A new $50-million suburban printing plant designed to handle the increased capacity required to print two editions at once, however, was "an admitted nightmare from the start"  as production problems hindered distribution. An experimental water-based printing technology proved problematic, as did press capacity. The original plan was to convert the Sun to all-day production, and when it was decided to make it morning only, there were not enough presses on-site to keep up.

Meanwhile, in accordance with long-standing corporate strategy, Southam moved in a series of transactions in May, 1990, to buy 13 community newspapers and three flyer distribution businesses in the Vancouver area. That set the government watchdogs to barking again, this time armed with the new Competition Act passed in 1986. In addition to the 65,000-circulation free-distribution Vancouver Courier, which had reverted to weekly publication, most contentious among Southam's purchases were the 60,000-circulation thrice-weekly North Shore News, distributed free in North and West Vancouver, and the all-advertising Real Estate Weekly. A federal tribunal ruled the latter acquisitions gave Southam a monopoly for real estate advertising in that market and ordered Southam to sell one.

Epilogue

Despite the advantage of its increasing monopoly, Southam has been unable to make its Pacific Press investment profitable. The rise in Sun circulation on the switch to morning publication was more than offset by a 10,000 drop in sales of the Province. Since then, circulation of both papers has continued to plummet. (See Table 1) In the next three years, the Sun dropped almost 25,000 to below 200,000 in average circulation, while the Province lost even more -- more than 35,000 since the Sun moved to mornings -- to its lowest level since converting to tabloid. Meanwhile, Pacific Press lost a reported $10 million.

The losing arrangement has proved a case study in the debilitating effect that poor management and labor relations problems can have in neutralizing monopoly advantages. At Pacific Press they have made the difference between profit and loss.

Table 1

Pacific Press Circulation

        Sun    Province   Total    Change (%)

1957  191,031   131,811   322,842
1958  200,446   112,210   312,656   -3.2
1959  210,505   106,762   317,267   +1.5
1960  215,748   106,333   322,081   +1.5
1961  219,656    98,660   318,310   -1.2
1962  226,102   101,208   327,310   +2.8
1963  231,641   105,477   337,118   +3.0
1964  237,294    98,928   336,222   -0.3
1965  242,619   103,926   346,545   +3.1
1966  240,338   106,501   346,839   +0.1
1967  245,041   104,851   349,892   +0.9
1968  251,266   108,464   359,730   +2.8
1969  254,043   115,536   369,579   +2.7
1970  210,420   104,054   314,474  -14.9
1971  225,146   110,468   335,614   +6.7
1972  235,389   113,898   349,287   +4.1
1973  241,821   121,539   362,360   +3.7
1974  249,278   128,992   378,270   +4.4
1975  236,743   126,553   363,296   -4.0
1976  234,711   129,437   364,148   +0.2
1977  232,505   128,924   361,429   -0.7
1978  240,770   131,623   372,393   +3.0
1979  219,503   127,067   346,570   -6.9
1980  234,983   126,535   361,518   +4.3
1981  240,991   134,991   375,982   +4.0
1982  241,761   136,616   378,377   +1.6
1983  243,419   148,928   392,347   +3.7
1984  245,780   158,428   404,208   +3.0
1985  248,472   175,078   423,550   +4.8
1986  245,473   183,268   428,741   +1.2
1987  239,237   183,018   422,255   -1.5
1988  234,528   187,935   422,463   +0.05
1989  230,782   189,028   419,810   -0.6
1990  220,141   190,949   411,090   -2.0
1991  210,917   189,124   400,049   -2.7
1992  214,576   179,461   394,037   -1.5
1993  221,263   175,296   396,559   +0.6
1994  208,639   166,780   375,419   -5.3
1995  206,027   159,815   365,842   -2.5
1996  196,457   155,258   351,715   -3.9