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National Post from Toronto, Ontario, Canada • 37

Publication:
National Posti
Location:
Toronto, Ontario, Canada
Issue Date:
Page:
37
Extracted Article Text (OCR)

FINANCIAL POST, MONDAY, MAY 21, 2001 CANADA C9 Fast food discovers chicken wings, hiking prices and leaving little guys flapping their wings The chicken wings at Yak-Zies bar in Chicago have been a moneymaking staple for owner Kenny Miller since the early 1980s. He sells 2,000 pounds of wings a week, 20 times the beef he uses in his hamburgers. While wings are as popular as sever at Yak-Zies, which fries and soaks them in spicy sauce, they are no longer profitable thanks to fast-food Canada's other media Blackmakes a splashinHawaii BLACK Continued from Page C1 "Once he is in a market, he never sells any papers. He only buys, and Gannett better realize that because they've got their hands full with David there," said a former longtime editor in Mr. Black's empire.

"He is a nice man, but just below the surface he is a shark." In his new waters, Mr. Black gives no sign of being intimidated by the Gannett leviathan. "We knew that Gannett was going to be very tough," the 55-year-old owner of Black Press Ltd. said in a rare interview. "So we've done everything we can to prepare for that and it has become more than business.

It always becomes personal, especiallyfor an entrepreneur." Honolulu is one of the few remaining two-newspaper cities in the United States. The Gannettowned Advertiser boasts a paid weekday circulation of 113,806, compared with 59,820 for Mr. Black's Star-Bulletin. The Gannett forces say they're waiting for the new arrival to show his competitive stuff. "I don't think there's anything that he's done that has surprised us," said Mike Fisch, publisher of the Advertiser.

"It has been fairly predictable." Since the reborn Star-Bulletin was launched in March, Mr. Fisch said, advertising at his paper has hardly suffered. He also said Mr. Black's paper continues to suffer with production and delivery problems. "But I have to congratulate Black on having the stamina to buy the newspaper.

That was a gutsy move on his part," he added. Mr. Black snorts at the suggestion that the Star-Bulletin is foundering, saying the paper is close to breaking even and on target to generate $100-million in revenue this year if you include MidWeek, the free Hawaiian weekly with a circulation of 280,000 that he bought last December so the Star-Bulletin could use its printing, circulation and advertising network. He also said the Star-Bulletin has already captured one-third of the local advertising market, enough to seriously erode his competitor's bottom line. "I think could lose in profit this year," Mr.

Black said. "We budgeted to get about a third of the daily advertising in the first year and I think we'll get it. We're almost there." As for delays in production, Mr. Black said the Star-Bulletin solved BUSINESS OPPORTUNITIES BUSINESS FOR SALE-ONTARIO http://users.gtn.net/vrlondon Need Angel, Partner or Investor? Financial information, Free ads. www.FolkStocks.com many of those problems after the launch, and that complaints about delivery service are not something only his paper has had to deal with.

"We've spoken with others who said they haven't been getting their morning Advertiser." The Star-Bulletin is by far the largest newspaper Mr. Black has ever taken on, and only his second daily. But history shows the media mogul has always seemed to get it right. His Black Press, based in Victoria, owns 80 community papers published at 10 printing plants in British Columbia, Alberta and Washington state. It is a well-oiled machine, generating more than $180-million in revenue a year (not including the Star-Bulletin), and growing at an annual compound rate of over the past 24 years.

Despite his impressive record, Mr. Black gave no indication of being preordained to become a publishing baron. Born in Vancouver, he moved with his family at the age of nine to Toronto, where his father, Alan Black, had a job as an advertising executive with Cockfield Brown. In his late teens, David Black returned to the West Coast, where he earned a degree in civil engineering from the University of British Columbia. He followed up with an MBA from the University of Western Ontario, then took a job on Bay Street as a junior analyst with Crown Life insurance Co.

In his two years at Crown, Mr. Black learned a lot about business, but it wasn't until he joined the acquisitions department of Torstar Corp. that he began to develop a fascination for the communications media. "Torstar was looking at possibly diversifying into other forms of media. I liked the news business in general and investigated and made investments in B.C.," said Mr.

Black. "We looked at a lot of things but I liked small business." He made the leap to running his own show by buying the Williams Lake Tribune, in tiny Ashcroft, B.C., from his father, who had bought the weekly paper in 1969. Those close to Mr. Black describe him as a wizard at putting an organization together. It was at the Tribune that he learned how to retool papers, cut costs, capture a local market, and above all make money.

Three years later Mr. Black acquired a second paper and started printing a group of about a dozen community papers on the Tribune's press. Before long, he began buying up competitors, mainly -town operators. I For advertising information HOME E- 519-673-3197 PARTNER WITH WORLD'S in their field. Canada pre-launch businesses.

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instant access to Commercial Credit Reports on more than two million Canadian companies at www.equifax.ca For sales information call 1-800-278-0278 TEN STAR FINANCIAL SERVICES www.tenstar.ca 1-877-ten-star GOVERNMENT PROGRAMS GRANTS AND LOANS INFORMATION FOR ALL BUSINESSES AND FARMS www.governmentgrants.com 1-800-505-8866 companies such as McDonald's Domino's Inc. and the KFC unit of Tricon Global Restaurants Inc. U.S. demand for wings, worth about last year, surged this spring as big restaurant chains be- Star off Honolulu gives HSTA Teachers a Star-Bulletin State of new today CARLO ALLEGRI NATIONAL POST David Black with the publications that extended his empire to Hawaii. The winning formula that he would apply consistently over the next 26 years was starting to take shape.

"He owns many presses, which papers depend on to reprint. And he's there when a small paper has trouble financially," said Roy Spooner, who in partnership with Mr. Black was briefly an owner of the Sidney Review, a co community weekly on Vancouver Island, before being bought out in 1982. "We didn't mesh," Mr. Spooner said.

"I was more interested in the paper being a community paper. David was interested in the return on investment." At the time, the Sidney paper had a staff of about half a dozen, he said, and his preference was for beefing up the editorial operation rather than the sales force. He also said the existence of another small paper in town did not concern him as much as it did his more determined and forceful business partner. "David worried about it, and eventually took it out of business. He was more prepared to cut costs and continue the expansion of his business.

I would have made less money, but I think it would have been a better paper." By the mid-1980s Black Press owned about 20 papers. The chain expanded south of the border in 1987, after Mr. Black sold a a a a a a a a a equity stake in his company to cable firm Shaw Communications Inc. The proceeds were used to buy about 15 community papers in Washington state. In 1990, Mr.

Black bought back Shaw's stake in Black Press and he continues to run the Washington papers. In 1997, he added the biggest chunk to his growing newspaper chain when he bought 33 publi- INTERNET NET call: 1-866-256-7678 MUTUAL FUNDS LARGEST CO. TEN STAR FINANCIAL leaders sought now. www.tenstar.ca 1-877-TEN-STAR NATIONAL POST For all your classified needs Industrial, Commercial Franchise Opportunities INC. Educators Direct Mail Order Companies Distinctive and Residential Service? New Used Vehicles TD Evergreen 307-7903 OFFSHORE SERVICES OFFSHORE FINANCIAL Learn how at: Eric P.

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To for the unorganized brought in a profit-sharing that gave each of them share certificate to 10 years. "He had thing so that there revolt," said the former Countering criticism comes before people Mr. Black says salaries ating units have gone years and that employees joyed health benefits. Although virtually Hawaii, Mr. Black into the limelight.

He do in Honolulu, and wife began spending there. The couple have ed into the social scene, attending parties and events for charities. The warm reception do with Mr. Black's what is perceived to be can institution. Since Star-Bulletin and the had been published operating agreement business jargon).

The was owned by Gannett Star-Bulletin by Liberty pers LP, a small chain Florida. Liberty decided 1999 to close the was thwarted by a federal lawsuit filed by the ment and a citizens ordered Liberty to find Mr. Black emerged owner in exchange for The deal ended the ing agreement and crushed any chance gaining a monopoly in his initiative, Mr. Black local hero and the talk media industry. "No one has done this before," Barnett, a communications pert at the University of Berkeley.

"It's almost the in which a JOA has been replaced by what successful competition." Although Gannett has defeated, there are limits it will engage in war. biggest and most profitable paper chain, whose USA Today, does not have of being a feisty local "Gannett will take a nothing, and if they can't the paper," Mr. Barnett In the early 1990s, a similar battle in Little ultimately capitulated Arkansas Gazette to its the Arkansas Democrat. year-old Gazette, winner Pulitzer Prizes, had been in red ink. "So Gannett, every advantage in the to sell the paper instead pete," Mr.

Barnett said. John Morton, a leading dia analyst, said Gannett lergic to long periods of the Advertiser may that situation. He revenues for the to lion a year, making it dominant paper in Hawaii. RY COND ESTATE and Listings www.Gulfport-Realty.com 1-800-291-6601 Estate Investment. REAL ESTATE RETIREMENT HOMES (416) 460-1811 RESIDENTIAL REAL ESTATE Listings HOMESALEZ.COM! New Online Ads! Save! FREE for Agents! CALIFORNIA FLORIDA.

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Morton workers, he "Winning for him is just going plan be able to stay in business and a $1,000 that thing on a profitable annually for up somewhere at a lower level to do some- the Advertiser." wouldn't be a Conventional wisdom has it editor. only the largest markets can that profit port two major dailies, said at his papers, Morton. "Advertisers tend to in his oper- on the cost to reach 1,000 readers," up over the he said. "If the Star-Bulletin is have en- going to be competitive on a basis, it can't unknown in rates high enough to cover stepped easily operating costs. That's probably leased a con- because their circulation is he and his ally lower.

The solution is to more time crease circulation." easily meld- In Hawaii, Mr. Black's regularly weapon could be MidWeek, fundraising free he bought to boost the Star-Bulhas a lot to letin's local publishing and role in saving tising presence. MidWeek could an Ameri- the single most important 1962, the of revenue for the Star-Bulletin, Advertiser since its advertisers include under a joint of Hawaii's largest retailers. (or JOA in To counter Mr. Black's MidWeek Advertiser strategy, Gannett recently and the chased PMP Co.

which Newspa- lishes three community papers based in with a combined circulation in late about 100,000 distributed free Star-Bulletin, but Oahu residents. antitrust From day one, the two state govern- have been matching blows. group. A judge day after the Star-Bulletin a buyer, and launched, Gannett said it as the new build a production facility in Kapolei and move joint publish- 400 employees there by instantly when the plant is expected to of Gannett The Star-Bulletin responded Hawaii. For saying it is investing a lion to build its franchise.

of the U.S. Each of the papers now publishes in the U.S. a morning edition and an said Stephen noon edition each weekday, plus law ex- plumper Sunday edition. California- Industry papers say that's only case than the market can handle, broken up and competition has paid off in spades could be for ad buyers, who seized on opportunity to drive down rates rarely been as much as to how far The price-cutting has forced The world's Black to temper his optimism. news- had hoped the paper would make assets include in the first a history months of operations, he said, competitor.

"we are not going to achieve monopoly or budget because ad rates have they'll sell down so much." said. In the meantime, his foray Gannett waged Hawaii has other rewards. Sailing Rock, but has been a long-time hobby. A and sold the years back, Mr. Black took a sevenarchival, month break to sail across the The 172- lantic on his 77-foot ketch Esperanof two za (which means hope in Spanish).

drenched Here the Pacific stretches who had in all directions. Mr. Black world, chose cedes that the newspaper battle of com- into which he has plunged been hard work so far "and U.S. me- would be nice to get away for may be al- while. My wife keeps reminding red ink but me every morning over breakfast never get to it's time to go sailing." estimates total Much as Gannett might wish Advertiser are no one who knows Mr.

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That's a niche that nobody else is filling." Once again Mr. Black was following his master plan of mustering a group of publications around a single printing press. "He is very analytical and knows the business extremely well," said Fred Gorman, publisher of Mr. Black's Red Deer central Alberta, we have a daily paper and five other products, plus some foreign products that we print here. It's become a more 'MY WIFE KEEPS REMINDING ME IT'S TIME TO GO SAILING' dynamic operation because of the clustering concept." Knowing how to get the most out of the available resources evidently also extends to the staff at Mr.

Black's newspapers. "He absolutely lowballs staff with salaries," said the former editor, who characterized him as a nice man but a business shark. The editor, who didn't want to be named, said a starting salary for a junior reporter at one of the Black papers is $25,000 to $30,000, or about half what a daily newspaper would pay." And there's virtually no budget for freelancers." The Trinity deal put Mr. Black's employee relations to the test, because most of the papers he acquired were unionized while the DIR DIRECTORY Fax (416) 386-2663 REM. ESTATE SERVICES CANADIAN REAL Canada's Top Realtors www.realestatecanada.tv B.C.

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