About FP Newspapers Inc. and its Business
Overview and Distribution Policy
FP Newspapers Inc. is an unincorporated open-ended limited purpose trust established on May 15, 2002 under the laws of Ontario. It commenced operations on May 28, 2002 when it completed an Initial Public Offering and purchased an interest in FP Canadian Newspapers Limited Partnership (FPLP).
The Corporation was established to acquire and own interests in the Winnipeg Free Press and the Brandon Sun newspapers by the acquisition of Class A Units and FPLP Notes of FPLP, which owns and publishes the Winnipeg Free Press and the Brandon Sun.
In November 2001, FPLP acquired the Winnipeg Free Press and the Brandon Sun from The Thomson Corporation. The Winnipeg Free Press is a major metropolitan daily newspaper serving the City of Winnipeg, its surrounding suburbs and the rest of the Province of Manitoba. Brandon Sun is a daily newspaper serving the City of Brandon and surrounding regions. In 2004, FPLP completed the acquisition of the community newspaper and advertising distribution businesses from Transcontinental Media. The acquisition included five weekly newspapers in the Winnipeg area and advertising distribution businesses in Winnipeg and Brandon.
The activities of the Corporation may include the indirect ownership of interests in other newspapers and media (radio, television, magazines and internet) businesses.
The Corporation intends to make monthly distributions to Unitholders of its distributable cash after:
- administrative expenses and other obligations of the Corporation;
- amounts which may be paid or payable by the Corporation in connection with any cash redemptions of Units;
- any interest expense incurred by the Corporation; and
- reasonable reserves established by the Trustees (to the extent not already accounted for).
FPLP’s strategy for achieving growth in the business is based on achieving improvements in the cash flow of its businesses, principally through a combination of strong local management, revenue enhancement, cost management and, where appropriate, acquisition opportunities that may become available to FPLP from time to time. The approach of FPLP to improving profitability involves enhancing product quality, including the amount and type of editorial content available in its newspapers, increasing advertising sales and taking measures to reduce costs and improve efficiency.
Strong Local Management
Because newspapers are primarily a local medium, requiring a clear understanding of local issues, FPLP empowers local management to react to changes in the local environment. Accordingly, all key editorial, advertising, circulation and production decisions are made by local management with consultation and review by the General Partners. FPLP places an emphasis on attracting and retaining management who have a thorough awareness and understanding of local issues.
FPLP intends to enhance advertising and circulation revenues by increasing its focus on the quality of the editorial content of its newspapers and by adopting new approaches to circulation. FPLP expects that by increasing the quality of its products, it can maximize both readership and advertising market share.
While content improvements are designed to minimize circulation erosion, FPLP strives to increase circulation revenues further through increased advertising and promotion of its products. The Winnipeg Free Press supplements its regular telemarketing programs with "sampling" programs that make the newspaper available to selected key geographic areas, without charge, for specific periods. The Winnipeg Free Press also intends to improve circulation by increasing the number of partnership arrangements with key advertisers and increasing the number of readership contests. Similar actions are being taken for the Brandon Sun, at a reduced level reflecting the smaller market.
FPLP also has significant excess press capacity at both its Brandon and Winnipeg facilities allowing it to increase its commercial printing operations in the region.
Management has identified and implemented certain cost reduction measures at both the Winnipeg Free Press and the Brandon Sun, including control of wage and benefit levels through outsourcing, training and technological improvements. To reduce costs on an ongoing basis, FPLP will continue efforts to improve the efficiency and profitability of the newspapers. Having successfully reduced expenses by centralizing newsprint purchasing, FPLP will continue to centralize its purchasing in other areas. FPLP will continue to examine further opportunities for cost savings, principally in the areas of production and distribution.
Growth Through Acquisitions
Management believes that opportunities may exist to grow revenue, EBITDA and cash flows of FPLP by acquiring additional newspapers and other media (radio, television, magazines and internet) assets. FPLP will consider acquisitions that would provide FPLP with additional revenue opportunities and the ability to achieve additional economies of scale and possible synergies.