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Sun News' Future Uncertain After Postmedia Buys Its Sister Papers

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The future of the struggling Sun News Network is up in the air after its parent company Quebecor sold off the majority of the newspapers that provided the channel with content on Monday.

UPDATE: Quebecor said Monday night it is concerned about the long-term viability of the channel but added that questions about its operation would not be answered until after the sale of the newspapers closes.

The news network will be able to keep its name under a licensing agreement with Postmedia, which is buying 175 English-language Sun Media newspapers for $316 million.

However, Sun News Network must change its circular red logo within a year as part of the deal, the same logo used by the Sun chain of newspapers operating in Edmonton, Winnipeg, Calgary, Toronto and Ottawa.

Quebecor will continue to run the newspapers until the deal is approved by regulators and shareholders, which means Sun News and the newspapers will continue to share content for the time being.

But little was revealed to employees about how the deal would affect operations at the news network, with few details on how the network will cope without the resources of the Sun newspapers.

“This will become part of the operational discussions within the Sun News -- needs will be assessed and the necessary recommendations will be made,” according to a staff memo obtained by J-Source.

It is the latest in a string of setbacks for the channel which has had to fight for survival since it was launched in 2011 and has run up losses in the $16-million to $18-million range annually.

When asked why the channel wasn’t included in the purchase, Postmedia CEO Paul Godfrey said simply “it wasn’t for sale.” He also said that the company was not interested in buying a TV network because it is focused on its print and digital businesses.

Postmedia splintered from its own broadcast affiliations in 2010, when Canwest, under bankruptcy protection, sold its assets. Shaw bought Canwest’s broadcast arm — including Global TV — while Postmedia took over the print properties.

Sun News Network has its own stable of reporters but it also relied on the Sun newspapers, which shared content with the TV station through Quebecor’s QMI wire service.

Senior Conservative sources have told HuffPost that Sun News Network vice-president Kory Teneycke wants to re-launch the channel and was looking for investors to spin it off from Quebecor.

Neither Teneycke nor a Quebecor spokesman could be immediately reached for comment.

The $316 million is a much-needed injection of cash for Quebecor, which lost $54.8 million in the second quarter of 2014, at a time when it is investing in its fledgling Videotron wireless division in the hopes that it will become Canada’s fourth national carrier.

“We believe management would prefer to keep its powder dry should all the right conditions fall into place for the company to pursue wireless expansion,” said Barclay’s Capital analyst Phillip Huang.

The company could use the cash to buy a stake in one of the country’s smaller wireless players such as Wind, or to acquire more wireless spectrum in the next auction, he added.

The sale comes a week after the CRTC ruled against Sun News Network in a payment dispute with Rogers, the largest cable TV operator. The regulator denied the financially troubled news network a deal that would have helped to shore up future revenue for the channel. But the CRTC did side with the network in a similar dispute with Telus, a much smaller distributor.

Quebecor spokesman Martin Tremblay said Monday night it is "studying the financial impacts of the decisions," adding the company believes fair distribution agreements are important for its survival.

Sun wanted cable companies to pay different rates depending on whether the channel was offered in a specialty package or on basic cable, as an incentive for distributors to carry it more widely. Rogers said that Sun News’ proposed rate (which was omitted from the ruling) would “greatly exceed” how much it is paid by Rogers competitors such as Shaw and Bell.

Rogers’ win means it will pay Sun News based on the same model it uses to determine the rate of pay for competitors like CTV News Channel and CBC News Network — the more viewers a channel gets, the more Rogers pays.

The problem for Sun News is that its audience is a fraction of its competitors. Sun argues it has been historically disadvantaged because it was buried in higher channels.

Sun News argued that it was unfair to compare the fledgling network to its long-established competitors because it is only distributed in 40 per cent of Canadian homes, while its competitors were in 100 per cent of homes.

With files from Althia Raj

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