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Posted: Sun Jul 04, 2010 5:00 pm Post subject: Media companies strike deal for Canadian Press
Media companies strike deal for Canadian Press
CTVglobemedia, Torstar, Gesca would own industry co-operative under tentative agreement
Published on Sunday, Jul. 04, 2010 12:01PM EDT
Last updated on Sunday, Jul. 04, 2010 12:42PM EDT
.The Canadian Press has struck a tentative deal to restructure its operations, ending its 93-year history as a not-for-profit industry co-operative and proposing to move forward under private ownership.
The owners of the three biggest members in the collective - CTVglobemedia, which owns The Globe and Mail; Toronto Star publisher Torstar Corp. (TS.B-T10.49-0.15-1.41%); and Gesca, which owns La Presse - would become equal partners in a new for-profit entity to be called Canadian Press Enterprises.
Until now, CP has operated as a co-operative, providing news coverage to its member organizations. However, financial difficulties at the wire service led to a need to look for investors to take a stake in the business.
“Our [pension] solvency problem has grown steadily worse,” CP’s director of human resources, Paul Woods, wrote to staff in an internal memo, underlining the difficulty the company has had keeping up contributions to its pension plans.
To temporarily relieve its financial burdens while it looked for investors, CP obtained federal approval in January 2009 to delay pension payments to make up a $34.4-million deficit in its pension plans, from 2009 until 2011.
The government also agreed that, if CP’s restructuring was successful, it could bring in a longer-term plan for relief. CP will now ask the government to implement a 13-year special payment schedule.
“The investors are committed to securing the future of our pension plans … supported by a profitable operation that can meet all of its obligations through cash-flow generation,” Mr. Woods wrote.
In order for the restructuring to proceed, the three investor companies have required that CP improves the financial health of its pension plans, and bring in a new defined contribution plan for future employees, meaning the company would put money into retirement funds and allow employees to manage their own investments within that fund.
This would lessen “the large funding burden [defined benefit] plans place on employers in an environment of low interest rates and longer life expectancy,” Mr. Woods wrote.
Talks with CP’s union members have now resumed; collective bargaining was delayed while the company worked out a restructuring plan. The company has set a target of the end of August for completing those talks, so that it can complete the transaction with the proposed new investors by October.
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