• I’d like to address myself to those of you who may not be familiar with the newspaper situation we have in this town. I think there is a presumption that those of us who live here realize what has gone down here in the past 43 years, but I think these things tend to get obscured by the mists of time. I know I didn’t understand the series of events until I began to study it in detail, and I worked in the newspaper business in this town for close to 20 years.

• It’s quite unbelievable that not only are both local daily newspapers published here owned by the same giant corporation, but so is one of the two national dailies that are printed and circulated here (but published out of Toronto). Not only that, but depending on where you live in the Lower Mainland, the community newspaper that lands on your doorstep free of charge one, twice, or even three times a week is probably also owned by the same giant corporation.

• This is a situation that has evolved incrementally over time. It didn’t happen all at once. I doubt the present situation would have been allowed by federal regulators if it had been presented all at once, back then in 1957 when it began.

• There have actually been three federal inquiries into the increasing level of concentration of ownership of newspapers in the Vancouver market, but for one reason or other, they have failed to reverse or even slow the trend. Let me take you back.

• In the 1940s, there were actually three competing daily newspapers published in Vancouver, with three different owners. The Province was owned by Southam, the country’s largest chain at the time, and it had the highest circulation in Vancouver, publishing in the evening. The Sun also published in the evening, and it was owned by the Cromie family. It was very much the second newspaper. There was actually an agreement at one time between Robert Cromie and Southam that his Sun would not circulate more than about 85 per cent of the circulation of their Province. The fact that he had to borrow money from Southam might have had something to do with it. Southam actually held the third mortgage on the Sun building at one time. The Sun, by the way, published for many years out of the Sun Tower, which is preserved as a heritage building downtown, the copper-domed tower at the corner of Cambie and Pender downtown, which was once the tallest building in the British Empire when it was built before the First World War to house the largest newspaper in town, the Vancouver World, so it was first know as the World Tower.

• Oh, and there was a morning newspaper back then that had been founded as a co-operative in the 1930s after a couple of different newspapers folded, the News-Herald. It was very much in third place behind the Sun and Province its entire life, although it had a solid and very loyal readership, mostly labor, of about 40,000, making it the largest morning daily west of Toronto. Vancouver back then was very much a working-class town. The News-Herald by 1957, when these events began, had been passed from hand to hand recently, having been owned for a time by the Sun, which bought it merely for its newsprint quota in the early 1950s and quickly flipped it to Lord Thomson.

• The Sun needed the News-Herald’s newsprint quota – it was rationed after the Second war due to shortages, because it was in a circulation war with the Province. Robert Cromie had died in 1937 and ownership of the paper had passed to his sons, who perhaps didn’t feel bound by the agreements made by their father, one of which included that neither evening newspaper would take advantage of a strike at the other.

• This all changed when the ITU struck Southam chain-wide in 1946 in response to Southam publishing with strike-breakers at its paper in Winnipeg. The Cromie brothers, Don and Sam, printed as many copies of the Sun as they could to get the lead on the strike-bound Province, and that’s why they needed the News-Herald’s newsprint quota.

• The Province did eventually get back to publishing after a shutdown of about six weeks, using non-union printers. Labor was very strong in this town back then, though, and initial attempts to get their delivery trucks out were blocked by thousands of unionists who massed in adjacent Victory Square on Hastings Street. There was a riot. Delivery trucks were overturned and set on fire. Things like that. The old Province Building is just west of the Sun Tower, backing onto Pender just where Hastings angles from Gastown to downtown, right at the triangular Victory Square.

• But labor, as I said, was a very strong force in this town back then, and even after it resumed publication there was a union boycott and many working people refused to buy the Province for many years. I know my dad wouldn’t read it, and I’m not sure he was happy when I went to work for it, and that was close to thirty years later!

• Anyway, Southam realized it had to try and win back the circulation it had lost to the Sun during the strike or it would go the way most second-place newspapers go eventually, which is out of business. So there was a newspaper war that went on in this city for about 10 years. Both Southam and the Sun spent millions of dollars in promotional giveaways, and it was really quite wild. But it eventually became apparent that the Province would not be able to get its lead back, and when the Eaton’s department store informed it in 1956 that it would from then only advertise in the Sun, Southam management realized this was the beginning of the end, the slippery slope down which it would slide to insolvency. Even back then, they knew about the circulation spiral, in which advertisers tend toward the largest-circulation newspaper in order to reach as many potential customers as possible. Readers follow the ads to the larger paper, and are followed by more ads in a vicious circle that has been well-documented in newspaper economics.

• So Southam decided to try and negotiate a truce in this newspaper war, and I was fortunate to be able to interview the former head of Southam, St. Clair Balfour, now close to 90 but still quite sharp, who came out here and made the deal with Don Cromie, who is unfortunately no longer with us. It’s a great story which I don’t really have time to go into, but the most interesting part to me was his tale of how, after returning to Southam headquarters in Toronto he consulted with the company’s lawyer, and together the two travelled to Ottawa to meet with the director of research and investigations under the Combines Investigation Act.

• There are, of course, supposed to be laws against supposed competitors going into business together and creating a joint monopoly, but Southam was confident it could make an argument that the amalgamation of the Sun and Province into a new holding company called Pacific Press, should be allowed on the basis of economic necessity. That is, that under the circulation spiral the Province would eventually have to fold and Vancouver would be a one-newspaper town. Remember that there were three competing newspapers in Vancouver back then, but under the deal made to form Pacific Press, the Herald would be bought from Thomson, who had been trying to unload it for years, and folded so the Province could move to morning publication.

• So, the part of the story that St. Clair Balfour told me, before having to end our interview for his regular lunch-hour tennis match, was that when he and the Southam lawyer went to Ottawa to tell the Combines people what they intended to do, the head bureaucrat looked at them and said, “I’m going to have to make inquiries but I suppose the longer we take, the better you’d like it.”

• The hearings into the Pacific Press amalgamation held by the Restrictive Trade Practices Commission went on for years. First, they needed financial information from the parties, then they had to hold hearings here in Vancouver. Then, a year later they held more hearings in Toronto. Their report did not issue until well more than three years after the Pacific Press amalgamation was announced. And, of course, it allowed the amalgamation despite the fact that legally, it wasn’t. They allowed it on the basis of economic necessity, accepting Southam’s argument that it was doomed to go out of business if it wasn’t allowed to go into business with its competitor.

• There were some conditions put on this amalgamation, however. The two newspapers were required to keep their editorial operations separate, as they had been doing since the merger, and the commission also recommended that a judicial order be entered preventing any changes in the agreement entered into by Southam and the Sun without court approval. This would also have included any changes in ownership, but such a court order was never entered. There was some negotiation and an undertaking was given by Pacific Press to merely “inform” Ottawa of any changes in the arrangement.

• This was an arrangement that was in place in about a dozen cities in the U.S. at the time, and by the late-1960s in about two dozen cities south of the border. But under U.S. anti-trust law, which is much stronger than our anti-combines legislation, they were held by the U.S. Supreme Court to be illegal, and it was only a furious lobbying effort by publishers there that got them an exemption from the law in the form of the Newspaper Preservation Act, which was allowed by president Richard Nixon despite his campaign pledge not to, and permitted newspapers to enter into partnerships known there as Joint Operating Agreements. There has been considerable difference of agreement ever since in the U.S. about whether such legislation was necessary to preserve competing newspapers or beneficial to newspaper competition or in fact limiting of it by keeping potential competitors out with a legalized joint monopoly.

• Now, two newspapers in bed together owned by two different owners is one thing, but both daily newspapers being owned by the same giant corporation is considered by most to be an even tighter monopoly. Of course, this is exactly what evolved in Vancouver. The Cromies sold out to F.P. Publications, a fast-expanding, Western-based chain, in 1963. F.P. was bought up by Thomson in 1980, and Thomson found the situation at Pacific Press, where the Sun’s profits were being drained by the money-losing Province, so as part of a much larger transaction, Thomson sold the Sun to Southam in 1980 so that both Pacific Press papers were then absentee-owned by the same giant Eastern corporation.

• Now most of you know what the rest of the transaction between Southam and Thomson entailed, but for the benefit of our visitors I’ll just outline them briefly. August 27, 1980 has become a date that lives in infamy in the history of this country, and has come to be known as “Black Wednesday.” Not only did Thomson sell the Sun to Southam, but also its quarter-ownership in the Montreal Gazette, which it had acquired in exchange for the plant and equipment of the competing Montreal Star, which actually had been folded by F.P. following a disastrous strike there in 1978, similar to the Province during which it lost its circulation lead to Southam’s Gazette. But the overshadowing events of that fateful day were the simultaneous closures of the Winnipeg Tribune by Southam and the Ottawa Journal by Thomson, each of which gave the other chain a monopoly in that market, as Southam also then enjoyed in Vancouver and Montreal, at least English-speaking Montreal. Southam and Thomson, of course, claimed that these simultaneous closures were simply coincidencal and denied that there had been any collusion between them to restrict competition, which, of course, would be quite illegal.

• But many people – cynics, all of them – couldn’t quite believe this and the level of outrage across the country, I think it’s safe to say, reached rather ear-splitting proportions. A Royal Commission was quickly called by Prime Minister Pierre Trudeau to investigate, and because time is of course of the essence in these matters, the head of this Royal Commission, a former newspaperman and Liberal candidate named Tom Kent, promised to report within a year. The commission held public hearings across the country and published a mammoth series of research reports and almost made its deadline, issuing its report in 1981.

• Now the Kent commission report made many recommendations that would have stopped and even rolled back the increasing concentration of ownership of newspapers in this country, none of which were ever implemented for various reasons, the main ones being a furious campaign by publishers against the measures, Trudeau’s preoccupation with repatriating the Constitution from Britain and the subsequent defeat of the Liberals at the polls by the Mulroney Consevatives.

• But the most relevant part of the Kent commission report to our story here is the fact that Kent really saw nothing wrong with the sale of the Sun to Southam and the fact that now both daily newspapers in Vancouver were owned by the same corporation. There was no suggestion that this transactions should be prevented. The reason for this was that there were other daily newspapers publishing in the Vancouver area, the Kent commission reasoned. The only daily they could have been referring to was the New Westminster Columbian, which circulated about 40,000 copies in the eastern suburbs and was in fact prevented legally from circulating within the citylimits of Vancouver, I believe, by a city bylaw that said only newspapers printed in Vancouver would be sold there. The Columbian went into receivership in 1983.

• That was the same year that criminal charges of monopoly practices were laid against Southam and Thomson by the federal regulators, including counts relating to the sale of the Vancouver Sun to Southam, but despite some damning evidence of collusion between the chains most of the charges were dismissed and those that were not did not get pursued by the Crown in the form of a second trial and were stayed.

• The damning evidence? How about a crudely-shredded memo from an un-named Southam executive’s waste-basket, which pasted back together read, referring to Thomson: "They get out of Ottawa. They get out of Montreal. They get out of Vancouver. They get control in Winnipeg."

• Or documents on Montreal showed combining production facilities would save $10.7 million, while including advertising and circulation functions to a combined operations would boost the benefit up to almost $20 million. But a monopoly situation of only one newspaper would have cut costs by $27.3 million and produced annual profits of $30.7 million.

• But some of these memos, the first one of which I read hangs framed on the wall of a Competition Bureau economist I have spoken with on the phone from Ottawa were thrown out under new Charter of Rights. Absent this evidence, the  judge concluded the closures constituted "good business sense, not an illegal conspiracy."

• So now Southam owned both the Sun and Province, which was losing great gobs of money. I know because I worked there. I remember our sports columnist Jim Taylor joking one day in the newsroom that the paper was so thin that the Province should start a contest – “Find the Ad.”

• There was much speculation in the early 1980s that the Toronto Sun chain would enter the Vancouver market in competition with the morning Province. It had been very successful in starting up colorful tabloids in markets where broadsheet dailies had been closed, such as in Toronto, following the death of the Telegram in 1971, and Edmonton, where Southam’s Journal had had the market to itself since the closure of the Bulletin in 1951. Even Ottawa and Winnipeg have morning tabloid Suns now.

• But in 1983 Southam pretty well headed off such a move by converting the stately old Province to a tabloid, but not a racy one like the Toronto Sun papers, but instead a conservative “family” tabloid. Soon the Province circulation was soaring, and even better, the paper was chock full of ads for electronics and other consumer items aimed at the younger demographic the newspaper was now reaching. But bad news for Southam, because the success of the Province took away circulation from the Sun, which dipped perilously close to the 200,000 mark it had passed in 1957 after the Province moved to mornings. The Province circulation was soaring toward 200,000 from where it had been before it went tabloid, about 140,000. (see table)

• So, in 1991, reading the changes that made afternoon newspapers an endangered species, especially the increased public reliance on television for its news, Southam switched the evening Sun to morning publication, head-to-head with its own Province. Well, it worked for a while, but since then circulation of both newspapers has declined. (see table)

• But the move that resulted in what I call the complete corporatization of newspapers in Vancouver came just before that, actually, when in the best time-honored tradition of business, which is to say, “If You Can’t Beat ‘em, But ‘em,” Southam began buying up most of the community newspapers in the Lower Mainland that had been eating into its advertising base under the “Umbrella” Model of newspaper competition, if you’re familiar with that.

• There were more howls of public protest, but this time there was some reason to think there might actually be regulatory action to prevent such further concentration of ownership. The old Restrictive Trade Practices Commission, which had proved totally incapable of enforcing the anti-combines legislation in this country had been replaced in the 1980s with a new Competition Tribunal, which supposedly has more clout, and it held hearings and actually ordered Southam to divest itself of several of these 18 or so community newspapers in which they competed head to head with each other.

• But Southam appealed to the courts, and it went on for years, all the way to the Supreme Court of Canada and they managed a few years ago to have the order overturned, so I guess what you see is what you get. Complete corporatization. Thank you very much.
Vancouver Newspaper Circulation

                Vancouver Newspaper Circulation

                   AM                                              PM

1945  News-Herald (co-op)  30,000            Province (Southam)     118,000
                                                                    Sun (Cromie)                 93,000

1950  News-Herald (Ind.)   40,000             Province (Southam)        97,000
                                                                    Sun (Cromie)               165,000

1957  Herald (Thomson)  30,000                 Province (Southam)      122,000
                                                                    Sun (Cromie)               198,000

1960  Province (Southam) 106,000              Sun (Cromie)               212,000

1965  Province (Southam) 104,000              Sun (F.P.)                   243,000
                                                                    Times (Ind.)                  40,000

1969   Province (Southam) 115,000             Sun (F.P.)                   261,000

1975   Province (Southam) 126,000             Sun (F.P.)                   237,000

1980  Province (Southam) 126 ,000             Sun (Southam)            235,000

1985  Province (Southam) 175,000              Sun (Southam)           248,000

1990  Province (Southam) 191,000              Sun (Southam)           220,000

1995                                                          Province (Southam)     160,000
                                                                 Sun (Southam)              206,000

2000                                                          Province (CanWest)     166,746
                                                                 Sun (CanWest)             200,420

            Vancouver Newspaper Timeline

1946          ITU strike against Southam, Province closed six weeks June 5-July 22
                 Victory Square Riot, July 23 – Province resumes publication, labor boycott

1947-57     Newspaper war, Sun vs. Province

1957          Pacific Press amalgamation announced, May 15
                 Province moves to morning publication, Herald bought from Thomson, closed

1960          Restrictive Trade Practices Commission Report issued, Sept. 12
                 Pacific Press amalgamation allowed, judicial order recommended against changes

1963          F.P. Publications buys The Sun from Cromie family

1964-65     Vancouver Times started as offset evening daily, closes after 11 months, lacks ads

1970          Pacific Press closed three months by strike, Feb.-May, unions publish Express
                 Senate Committee on Mass Media calls for Press Ownership Review Board

1978-9       Pacific Press closed eight months by strike, unions again publish Express

1980          Thomson buys F.P. Publications, including Vancouver Sun
                 Southam closes Winnipeg Tribune, Thomson closes Ottawa Journal, Aug. 27
                 Thomson sells Sun to Southam for 100% ownership of Pacific Press
                 Royal Commission on Newspapers called, criminal investigation of chains

1981          Kent Commission report calls for restrictions on newspaper ownership
                 No change to Pacific Press recommended as other dailies operating in area

1982          New Westminster Columbian closes. Southam, Thomson charged with monopoly
 
1983          Southam, Thomson acquitted on criminal charges, Province goes tabloid

1989          Southam begins buying competing community newspapers in Lower Mainland

1990          Competition Tribunal hearings into acquisitions

1991          Southam ordered to sell some competing titles, company appeals to court
                 Sun moves to morning publication