Blog by John Miller

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Time to go local

Let's say your mortgage is more than your house is worth and you've stiffed your banker for seven months because you can't afford to even pay the interest. Is anyone going to listen when you say my luck may change soon and property values could increase and it's not the time to foreclose?

Hello there, Leonard Asper!

The man who turned his father's $20-a-share legacy into something worth 6 cents seems to have inherited only chutzpah.

The banks are right to put his CanWest Limited Partnership up for sale and take what they can get. Leonard owes them $1.5 billion and counting. The group's 10 major daily newspapers are insolvent. Leonard's dismal track record as a newspaper proprietor has scuttled Izzy Asper's dream of a national multi-media news delivery network for good.

Always audacious, Leonard is worried that putting the newspapers up for sale at fire-basement prices may cause advertisers to turn away from CanWest's broadcasting assets, which also happen to be in bankruptcy protection. The banks have politely but firmly told him to mind his own business (once, of course, he regains control of some of it).

But in another way the banks are wrong. And stupid. They seem to have learned nothing from Leonard's disastrous stab at convergence.

CanWest's bankruptcy protection should tell us one thing: There is nothing to be gained from the synergies the company forged between its print, broadcast and online properties, including the perpetually money-losing National Post, a national wire service, and reporters able to deliver stories across media.

Those synergies are why the banks -- and even Leonard Asper -- are intent on selling the newspapers in one block instead of breaking up the former Southam chain to attract regional buyers.

I doubt anyone will want the whole thing. But Quebecor could well have an interest in the Montreal Gazette; Torstar might consider adding the Ottawa Citizen to its Ontario daily stable; and, yes, the reincarnated David Radler, fresh from jail, might relish the chance to reacquire the Vancouver Sun and Province. (The first bidder, in fact, is a group headed by Senator Jerry Grafstein which wants only the Gazette, Citizen and Post).

The CanWest chain is surely worth more sold separately than in one chunk. Why? Because the National Post doesn't have enough circulation in Toronto to carry a national advertising buy anymore. And it's losing a million dollars every two weeks. The rest of the papers are mostly profitable. If you're putting up a billion, you don't want an albatross (the Post) dragging you underwater.

The other reason is that media are increasingly going local. This can be measured in the decline in national advertising at the papers in question, and the growing appetite for local news, which cannot be satisfied by the Internet the way national and international news can.

The return to local owners -- a throwback to the days when Atkinsons and McConnells and Siftons owned their papers instead of debt-burdened public corporations -- is the best idea for rejuvenating the Canadian newspaper industry that I can see on the horizon.