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Godfrey Transcript

Godfrey Transcript

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Published by Steve Ladurantaye

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Published by: Steve Ladurantaye on Aug 21, 2012
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Steve Ladurantaye/Globe and Mail media reporterPaul Godfrey/Postmedia Network Inc. CEOGlow, August 15 2012http://www.theglobeandmail.com/report-on-business/careers/paul-godfrey-rewriting-a-dire-news-story/article4487112/ 
How did you debt issue go?
 The roadshow went well. We were pleased. It gives us a lot of flexibility in changing the way we do business and gets rid of the covenants. When you do refinancing, you've got to getsomething out of it. What you don't want to do is eat up all your cash and be afraid you're going to crush up against your covenants. So we're in good shape now.When you plan these things, it takes a couple of months to get the book and find out whatinterest rate you can get it at. We used Scotia, and it was superb. We got oversubscribed andhad to cut people back under ask. We got some existing bondholders rolling their debt, a lot of new ones.
What kind of reaction did you get in the U.S.?
In New York they knew our story better than Boston, some of the people we pitched to werepresent debtholders. Boston we had to explain a little more. We explained the differencebetween Canadian newspapers and American newspapers and talked about how penetrationrates for Canadian newspapers are in the mid-70s while in the mid-50s in the U.S.
What else did you tell them?
Well we have to learn two things. There is more competition from media outlets in the U.S.than there is in Canada, especially in magazines and radio. A lot more. Secondly, I think theunfortunate things U.S. newspapers did when they started cutting costs they cut editorial.People buy newspapers for the editorial product and you have to have compelling content at
all times or people will abandon you. That’s what happened at a lot of the American papers – 
 they cheated on content and look where they are now.
We’re the largest newspaper chain in English Canada, fact is if we don't supp
ly compellingcontent people will abandon us. You've got to have content from good journalists and goodcomment on that news. You don't get that in a lot U.S. newspapers, the regular metropolitannewspapers that have basically cheated.These brands are 125 years old, ex the national post, and they've got brand equity in thecommunities. That's where it starts and starts. That story impressed them, they looked at ourcost reduction plans.We were very upfront. We said "Look, newspapers everywhere are seeing a decline in print adrevenue. It may not come back to where it was, in fact the truth is it's not. We have an increasein digital revenue which we're seeing. How do you balance the fact - look in next three yearsprint revenue will decline more than digital revenue is going to increase. There will be a timewhen it will cross over, but not in the next three years. You have got to take it out of the costside to be viable.The way you do it is reduce legacy costs of the old way you do business. Take down the debt.We sold the building up here, announce in next few days where we are going. We got the dealdone, we're very happy with what we've done. We'll tell our staff two days from now, it's not amaterial change. It's nothing we have to publicly report. But everyone is guessing. We'llprobably move by December 2013, the building we're in they are doing some renovations.If we can stay even on every other front our brand equity will be the difference. All thesewebsites who report news you know how careful editors have to be about taking someone'sblog and believing that's gospel. Your editors almost have to be curators.
How involved are you in the day-to-day operations at head office?
Very. All of those decisions get reported up the chain. Wayne oversees and he reports to me.Any outsourcing matter would need my sign off. Negotiations with Pacific Newspaper Group Iinsist on being hands on, I don't sit at the bargaining table but I have gone out and spoken tothe union people but also at townhall meetings. I make sure I know what's going on.It's very important to me that there be no surprises. Do we get involved in the editorialproduct, no we don't on a day-to-day basis but we are going to a one-touch newsroom inHamilton. There's national news, international news, business news, travel news,entertainment news, arts and sciences. Stories will have common pages in all our newspapers.What the local guys are going to do is local news and local sports. People buy newspapers forlocal news. Going forward, their full focus will be local. Three papers, by the end of the monthall will be on there. By the end of the month Post will be too.
So what happens in Hamilton?
These people will do editing, photo layout, editorial layout too. All out of Hamilton. It's been asurprisingly seamless transition. A local news story out of Montreal will get the priority inMontreal, we're not suggesting we will tamper with local news at all. But this is money savingconsolidation. So maybe we'll have a national news story we like, maybe it'll be a story aboutHarper and Flaherty on mortgage rates. If it's a front page story, we'll play in on the fronteverywhere.
But that would be local decision, right?
Yes, but if we decide in Hamilton it's going to go on the front ev erywhere then it's going to goon the front everywhere.
Wait, there will be that level of control out of Hamilton? Who gets to make that call?
Lou Clancy.
So you're saying he'll look at the daily news mix and make the calls?
He may not make the actual calls, he's got staff. But he's the guy in charge.
That's a lot more power in Hamilton than I thought. I thought they were just doing pages.
It's a little different. Look, if a publisher or an editor says "You know what this shooting tragedy where someone shot six people is so big here we got to move it up" then fine. They'll have someflexibility. But if Israel bombs Iran, that's a pretty big national story.
That cuts out a lot of planning at the local level.
Yes, but Wayne Parrish did a good job of bringing all the editors together and explaining thenecessity of this and talking about reducing legacy costs.
Criticism would be you are taking away local decision making. It's a less local paper.
It's a more local paper, those editors at those papers will have more opportunity to provide onthe street local news.
But the editor in Ottawa would have a better idea of what international news people in Ottawawant to read. You're willing to sacrifice that?
So who still works at a newspaper in a few years from now?
Ultimately newspapers will be content providers - I'll go one further and say compellingcontent providers - and sales and marketing people. It's not that you want to do this, you haveto do this.
So you didn't build this debt problem, how do you solve it?
There's a lot less debt that when company went into CCAA and it was $1.4-billion. It was $700two years ago now just under $500.
Last five pounds are the hardest to lose.
Always. But we still produce a lot of cash and our projections are reasonable going forward.
So what do you do these days, again?
I'm up at five when the dog wakes me, I'd like to sleep till six. I'm on the Astral board, Cargo Jetboard, chairman of RioCan, Mobilicity, OLG.
You were synonymous with the Sun. Do you miss it?
Working for Doug Creighton. Nothing away from guys now, but he was very special. Hetreated every one of his employees like family and we all loved him.
You don't see that so much anymore.
You don't. What other place could you go to if you worked ten years you got your four weeksoff and then two extra months of sabbatical leave. Do what you want, the job would be therewhen you got back. At Christmas, every employee at the Sun two weeks before Christmas SantaClaus would come and you'd get a week of your salary in cash so you'd have money forChristmas. If a reporter did a good job, he'd send him and his wife away from the weekend toNew York. Everyone cared about each other. Parties galore.
Have you watched the Sun News Network?
I've seen it once or twice. I get home so late that I watch the 11 o'clock news or the last twoinnings of the baseball game. I'm still very dedicated to the Blue Jays. Being involved inbringing the team and knowing the organization. I got home last night at 9:40 I guess and they were just going into extra innings. I'm going tonight, Joe Carter invited me. I don't have a close,close relationship but when he played with the Blue Jays he brought in his daughter whowanted to be a journalist to talk about journalism. He has a golf tournament.
Do you own all your buildings?
Most. We own printing plant in Vancouver but not the office building. In Edmonton we ownboth the plant and offices. Calgary same building. Regina and Saskatoon are in buildings weown. In Windsor we just sold the building to the University of Windsor and have taken over anold movie theatre we'll get into in November or December of this year. Ottawa we own.Montreal we're in a rental, we own the plant.
You must be thinking about selling the Ottawa building. It's in the middle of a booming area.
Oh for sure. But the key thing is, if you have presses it's a little bit more difficult unless yououtsource.
You've done that in Edmonton.
Mm-hmm. That is done. There's a lot of things going on.
Ok, fine. What about paywalls?

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