Vue History P02 GS comment

EDMONTON WEEKLY FIGHTS TO STAY ALIVE AND INDEPENDENT

A bitter newspaper battle in Edmonton has caught the attention of independent publishers across the country. Last month, the Alberta Court of Appeal overturned an injunction obtained by an accounting firm "for the benefit of a large solvent creditor" -- Alberta-based Gazette Press, which is 49-percent owned by Southam Inc.-- where the "only motive" was to kill off an Edmonton urban weekly newspaper.

Edmonton entrepreneur Ron Garth previously published the urban weekly, SEE Magazine, which he claimed generated annual revenues of $482,018 for the year ending June 30. Gazette Press had a "general security arrangement" on the assets of SEE Magazine and printed the publication for three years. However, on September 2, Gazette Press principal and Canadian Community Newspaper Association president Duff Jamison told Garth that he was going to seize the assets.

Garth claimed that the paper owed Gazette Press just $70,000 (the difference between accounts receivable and the print bill) and pleaded to no avail for Jamison to convert the debt into equity. Gazette Press, with Southam as its 49-percent owner, forced the little newspaper into receivership, claiming it was owed $250,000.

Jamison told the Straight that he would have preferred another option, but it was impossible to reach an agreement over the value of the assets. "SEE Magazine was losing a lot of money and was unable to pay its printing debt, and I was going deeper and deeper rather quickly," Jamison said. "It was adding up to the tune of about $20,000 a month." [another lie - not unlike the lie: Newspaper Chain Buys Vue Weekly - Article 6 below]

Then the receiver immediately started publishing its own version of SEE Magazine, and worked out an arrangement with Gazette to print it. In the meantime, Garth struck back by creating his own paper, called VUE Weekly. "The receiver arrived at SEE's premises to find only bare walls. The birds had flown," the appeal panel wrote. "Some six or seven days before, Garth had met with the staff at a private residence, and they had agreed to start a new company. Indeed, they actually did so, and distributed it on the streets the day before the receivership order was made."

The receiver obtained an injunction through a Chambers application on October 16 and sent notices to advertisers that the paper would be off the street for at least four weeks. However, the receiver found itself in court four days later before the Appeal Court panel, which tossed the injunction aside. VUE Weekly didn't miss an issue, picking up considerable national and local advertising along the way. The Appeal Court criticized VUE Weekly's "underhanded methods", but suggested that didn't justify wiping it out of the market before a civil suit went to court. The Appeal Court judges also wrote that it was "very doubtful that the receiver had any interest in keeping most of the staff or contributors of SEE or VUE".

So, what does this have to do with Vancouver, you say? There might well be no connection whatsoever. However, Southam owns the Vancouver Sun and the Province. Southam also owns a majority equity interest and slightly under 50-percent of the voting shares in Lower Mainland Publishing Ltd. which owns the Courier, the North Shore News, the Delta Optimist, the Richmond News, Now newspapers, South Delta Today, Abbotsford Times, Chilliwack Times, Maple Ridge-Pitt Meadows Times, Royal City Record, and 14 editions of the Real Estate Weekly.

Last August, the Federal Court of Appeal ordered the federal Competition Tribunal to reexamine its 1992 decision to approve Southam's purchase of the Courier and the North Shore News. Once again, arguments will probably be made that Southam exerts too much control over this market --on the advertising and the editorial side-- and if that happens, you can expect Southam to deny that this is a problem.

This time, however, the Competition Tribunal might be encouraged to consider what happened in Edmonton, along with a redesign of the Courier that bears a few striking similarities to a well-known, independently owned Vancouver urban weekly. It's possible that the tribunal might also be encouraged to examine the uncanny resemblances between independently owned Business in Vancouver's clever announcements page and the announcements page that subsequently began appearing every Monday in the Southam-owned business section. Stay tuned.