Diane Francis Business Profiles

Tuesday, March 14, 2006

Journalist Does Good

Diane Francis column Tuesday Post March 14

NEW YORK CITY - John Paton is a Canadian journalist who was born in Scotland, speaks great English, halting French and runs the largest Spanish-language newspaper chain in the United States.

"This is a meritocracy and business is rough and tumble, and in New York it's about what you know -- not who you are," he said in a breakfast interview yesterday.

John is Chairman and CEO of Impremedia, a holding company which owns Spanish-language papers in six cities, including the three largest circulation ones. The company is privately owned by institutional investors, including the Bank of Montreal, plus management. Plans are to make several more acquisitions in strategic markets, then take it public in a handful of years for hundreds of millions.

The Hispanic minority in the U.S. is larger than the afro-American and there are more Spanish-speaking Americans than Canadians, or roughly 34 million. Estimates are that another 8 million are there illegally.

Impremedia was the brainchild of John and Doug Knight, both former colleagues of mine at Toronto Sun Media. Doug was publisher of The Financial Post then the Toronto Sun. He recently left Impremedia to pursue other interests.

Ironically, the two came across their Spanish strategy only after many frustrating efforts to acquire small-market newspapers in Canada on behalf of some large institutional investors.

"We had both left the Sun and decided to look at papers under the radar that, if pulled together, formed a significant footprint for advertising interest," he said.

"We made three bids on three groups of papers for between C$300 million and C$600 million but walked away when prices got too high," he said. "This introduced us to a whole bunch of bankers and bankers really like it when you exhibit deal discipline."

John and Doug decided to share office space with Edgestone Capital in Toronto and work with Sam Duboc to pursue opportunities.

"I was just going to chase deals until I caught one," he said.

Then a phone call arrived from a venture capitalist in Beverly Hills, who admired their joint track records, which changed their direction.

"We went to California for a meeting with Stephen Rader of Clarity Partners and he suddenly said Spanish language newspapers," said John. "And I said why not Ukrainian newspapers because I don't speak Ukrainian either?"

The two were taken aback by the suggestion, but agreed to research the market.

"I got real excited real fast. There were three reasons: no one owned two Spanish language papers so ownership was fragmented; profits were sub-par so there was room for upside; and the market was huge and growing," he said.

On July 2003, Impremedia bought El Diario in New York City then quickly snapped up papers in Los Angeles, Florida, Chicago and San Francisco. The company also produces a Spanish-language newspaper on behalf of the Houston Chronicle for its enormous Mexican population. And more acquisitions are in the offing.

Now the papers earn higher margins than the industry and enjoys double-digit growth in advertising revenues, he said.
John's expertise was honed at the Toronto Sun Media. His career there started after he snapped a photograph while a young journalism student at Ryerson of one of that newspaper's star columnists who was dancing with a stripper.

"He told me I could take the photo and sell it to the Sun," he said. "So I went to the editor on the desk that night and showed him what I had. He said what do you want for it? And I told him a job. That was it."

He began as a copyboy, or gopher, then worked the graveyard shift in order to complete his journalism studies at Ryerson.
From there, he covered a number of beats as a reporter at the Toronto Sun but Chairman Doug Creighton spotted his managerial talent. He sped through the ranks eventually running a succession of the company's newspapers until 1997 when he became a Vice President.

In 1998, the chain (which had been public, then privatized a few years then public again) was taken over by Montreal's Quebecor Inc. About 10 key managers such as Paton made an estimated C$6 million apiece in the buyout.

In 2000, he left to pursue his interest in the world of deal making. And the rest, as they say, is history.