Hawaii newspaper purchase backed by Toronto insurance firm
BY Rick Daysog
Advertiser Staff Writer
A Canadian insurance giant will provide much of the financial backing for Honolulu Star-Bulletin owner David Black's purchase of The Honolulu Advertiser.
Fairfax Financial Holdings Ltd. of Toronto will have an ownership interest in the state's largest daily newspaper and a seat on its board of directors, said Dennis Francis, the Star-Bulletin's publisher.
Francis declined to disclose the size of the investment or the purchase price for The Advertiser. The Advertiser's owner, Gannett Co., would only say that it received a substantial offer for The Advertiser.
Fairfax had been a major investor in Canadian media companies such as Torstar Corp., owner of the Toronto Star newspaper, and CanWest Global Communications Corp., Canada's largest media company.
But the company recently wrote off those investments due to their financial struggles.
Fairfax executives could not be reached for immediate comment.
Black stunned the local business community last week when he announced that he was purchasing The Advertiser, its Web site and its nondaily publications and would put the Star-Bulletin up for sale.
Black also said he will consolidate the newspapers, which could result in layoffs at both dailies, if he is unable to sell the Star-Bulletin.
The Advertiser, with a weekday circulation of about 130,000, has 600 full- and part-time employees, while the Star-Bulletin has 300 employees and about 60,000 readers.
The deal, which is expected to be completed this summer, will likely mean a name change for The Advertiser reflecting the consolidation.
Gerald Kato, a University of Hawai'i-Mānoa journalism professor, said Fairfax's input on how The Advertiser is run will vary with the size of its investment.
If it's a large investment, Fairfax could play a role in deciding the look and feel of the newspaper as well its staffing levels, Kato said.
"If you are a major investor, you get some say in the business operations," he said.
Founded in 1951, Fairfax owns Toronto-based property and casualty insurer Northbridge Financial and New Jersey insurer Crum & Forster. The company reported net income of $1.5 billion in the 12 months ending on March 31, 2009.
In 2007, the company acquired an 18.2 percent stake in the Toronto Star's parent Torstar, which also owns romance book publisher Harlequin and 20 percent of the Star-Bulletin's parent Black Press Ltd.
Fairfax purchased 22 percent of CanWest's nonvoting stock in 2008.
According to the Globe and Mail of Toronto, Fairfax wrote down most of those investments last year due to Torstar's recent financial struggles and CanWest's 2009 bankruptcy.